Wisr Limited
Annual Report 2023

Plain-text annual report

ANNUAL REPORT 2023 WISR LIMITED • ANNUAL REPORT 2023 Wisr (ASX: WZR) is purpose-built to improve the financial wellness of all Australians by helping them make smarter decisions with their finances. WISR LIMITED • ANNUAL REPORT 2023WISR IS FOR YOUR SMART PART 1 WISR LIMITED • ANNUAL REPORT 2023 2 WISR LIMITED • ANNUAL REPORT 2023CONTENTS Chair & CEO’s review Delivering on FY23 objectives • Profitability delivered alongside moderated growth • Key results • Positive operating cash flow delivered • Wisr YOY revenue growth • Wisr YOY lending platform growth • Wisr YOY loan book balance • Strong funding platform • Capital position Financial wellness is a smart strategy • Financial Wellness Platform profiles • Smart decisions at any stage of a customer’s life, anytime, in their pocket • Wisr’s FWP improves loan customers’ financial health Award-winning momentum Executive Leadership Team Board of Directors Financial report • Directors’ report • Auditor’s independence declaration • Consolidated statement of profit or loss and other comprehensive income • Consolidated statement of financial position • Consolidated statement of changes in equity • Consolidated statement of cash flows • Notes to the financial statements Directors’ declaration Independent auditor’s report ASX additional information Corporate directory 4 8 9 11 12 12 13 13 14 15 16 17 18 20 21 22 24 26 27 49 50 51 52 53 54 87 88 91 94 3 WISR LIMITED • ANNUAL REPORT 2023 CHAIR & CEO’S REVIEW Matthew Brown Interim Chair Andrew Goodwin Chief Executive Officer 4 Dear Shareholders, FY23 has been a challenging year for many of us. In response to macroeconomic conditions, including ongoing RBA Cash Rate increases, inflation, tightening of funding markets, and broader economic uncertainty, we implemented a capital management strategy that prioritised profitability on a run-rate basis1 (within 12 months) over accelerating loan growth. We’re extremely pleased that despite the economic uncertainty, Wisr has delivered all of the Company objectives set at the end of FY22. We made prudent and proactive adjustments to the Company’s strategy and cost base to successfully deliver profitability on a run-rate basis (with two positive EBTDA quarters in FY23) while maintaining a robust balance sheet. In Q1FY23, we delivered our 25th consecutive quarter of loan growth before a series of cost reductions were enacted throughout the quarter. At the beginning of Q4FY23, we made the prudent decision to reduce operating costs further while continuing to focus on profitability. This included the deliberate moderation of loan origination volume and additional headcount reductions. Despite the moderation in volume, we’ve delivered positive operating cash flow of $7.4M2 and a 78% improvement in EBTDA2 for FY23, which included two positive quarters (Q2 & Q4). This was driven by operational leverage expansion with operating revenue growth of 55% to $91.9M and a 20% reduction in operating expenses to $32.8M3. We also 1 Profitability is on a run-rate EBTDA basis 2 Operating cash flow is audited and on a cash basis per the 4E versus EBTDA (audited) which is a profit and loss statement metric. Both operating cash flow and EBTDA exclude $1.1M one-off restructuring costs. Source: FY23 (Appendix and Financials) 3 Excludes $1.1M restructuring costs WISR LIMITED • ANNUAL REPORT 2023grew our prime loan book by 19% and priced our inaugural secured vehicle loan and third asset-backed securitisation (ABS), Wisr Independence Trust 2023-1. These temporary settings are considered appropriate to maintain a strong balance sheet, and the business has continued to focus on NIM expansion through lifting front book yield in response to the higher cash rate. We’re incredibly proud of the results we have achieved. It’s a strong validation of our purpose-built business model, prime customer profile, quality loan book, prudent treasury and capital management, underwriting process and the capability of the widely recognised Wisr team. FY23 PERFORMANCE HIGHLIGHTS Loan book: • Loan book growth of 19% to $931M (FY22: $780M) • Total new loan originations down 19% to $495M (FY22: $611M) following deliberate moderation of loan origination volume to maintain a strong balance sheet and prioritise profitability • Total loan originations $1.6B4 as at 30 June 2023 • 90+ Day arrears of 1.25% (FY22: 0.98%) and 781 average credit score on the total book (FY22: 780) Financial performance: • Operating revenue growth of 55% to $91.9M5 • 78% EBTDA improvement (FY23: $(1.6)M2 vs FY22: $(7.2)M) • Continued NIM expansion, with the Company now delivering a NIM run rate (June 2023) of c. 5% on new business written Balance sheet and funding: • Cash balance (excluding restricted cash) $23.1M as at 30 June 2023, consisting of $21.7M unrestricted cash and $1.4M loans available for sale • Equity note investments within Wisr Warehouses of $48.3M • Sale of Freedom 2021 G1 notes (settled June 2023), releasing additional capital of $3.6M into the business • Strengthened the balance sheet by securing a new $25M head company debt facility (Q2FY23). The facility has a tenor to July 2025 • Rolled-forward Wisr Warehouses (WH1 & WH2) for another 12 months (Q2FY23) • Received credit approval from another Big Four bank for a third warehouse facility Wisr Independence Trust 2023-1 securitisation: • Third ABS transaction and the first secured vehicle loan ABS transaction for the Company, the $200M Wisr Independence Trust 2023-1 • Received a AAA Moody’s rating for the top two tranches and a weighted average margin of 2.58% over one-month BBSW (FY22: $59.4M) Loan originations audited Revenue audited and percentage increase is on previous corresponding period (PCP) 4 5 5 WISR LIMITED • ANNUAL REPORT 2023 • Freed up $200M capacity in $250M WH2 • National Australia Bank (“NAB”) acted as the Arranger, Dealer and Joint Lead Manager, while Westpac Banking Corporation was the Dealer and Joint Lead Manager • $675M in total ABS transactions raised by Wisr to date Financial Wellness Platform: • Proprietary channel passed 758,000 customer profiles at 30 June 2023 with 17% growth on pcp (FY22: 647,000). FY24 OUTLOOK As we enter FY24, we’re well-capitalised and building sustainable revenue. Given the current macroeconomic environment, we will continue our broadly conservative stance until market conditions stabilise with a continued focus on NIM expansion and maintaining a strong balance sheet to deliver a profitable company. When the conditions are deemed appropriate, the business has measures to pivot quickly and recommence scaling. Our competitive advantage, a purpose-led business model that improves financial health and goes far beyond the traditional lending experience, has never been more relevant as rising interest rates and other cost-of-living pressures create a financial strain for more Australians. We want to support customers to reduce debt faster and improve their financial position. As consumers demand fairer financial products, services and tools, Wisr is well-placed and well-resourced to meet the demand. To our shareholders, on behalf of the Wisr Board and Wisr’s Executive Management, we sincerely thank you for your ongoing support. Lastly, we would like to thank the Board, Executive Management and all of Wisr’s staff for their continued support, vision, expertise and resilience in rapidly changing conditions. We have the resources and capability to safeguard the business through the economic cycle and be a profitable, well- capitalised company of a significant scale that continues to execute our purpose-led strategy and positively impact how Australians experience credit. Matthew Brown Interim Chair Andrew Goodwin Chief Executive Officer 6 WISR LIMITED • ANNUAL REPORT 20237 WISR LIMITED • ANNUAL REPORT 2023 KEEPING PROMISES DELIVERING ON FY23 OBJECTIVES 8 WISR LIMITED • ANNUAL REPORT 2023Profitability1 delivered alongside moderated growth Wisr began FY23 with the goal of achieving profitability1 within 12 months. Our prudent and proactive adjustment of strategy and cost base, in response to macroeconomic conditions, successfully delivered profitability1 on a run-rate basis in FY23 and positioned Wisr for long-term sustainable growth. Objectives set for FY23 Outcomes Focus on near-term profitability Cost management Strategic adjustments ✓ Significant reduction in short-term growth aspirations in lending ✓ Uplift of front book yield ✓ Switching from high to moderate growth to positively impact EBTDA ✓ Material reduction in employee expenses and headcount ✓ Material reduction in external spend ✓ Pausing all new credit product expansion and/or go-to-market expenditure ✓ Exited support for Arbor (EU market) and any short-term geographical expansion ✓ Reduced investment in the Wisr Financial Wellness Platform Growth moderated and profitability1 delivered June 2023 run-rate new loan origination yield (c. 13%) and Net Interest Margin (NIM) (c. 5%) Operating cash flow of $7.4M2 and 78% EBTDA2 improvement (FY23 vs FY22), including two positive quarters (Q2FY23 and Q4FY23) 1 Profitability is on a run-rate EBTDA basis 2 Operating cash flow is audited and on a cash basis per the 4E versus EBTDA (audited) which is a profit and loss statement metric. Both operating cash flow and EBTDA exclude $1.1M one-off restructuring costs. Source: FY23 (Appendix and Financials) 9 WISR LIMITED • ANNUAL REPORT 2023 Wisr has a unique and differentiated strategy Digital Lending Platform Wisr’s unique competitive advantage Financial Wellness Platform 10 WISR LIMITED • ANNUAL REPORT 2023Key results Moderated lending growth $495M1 $1.6B1 $931M in new loan originations Total loan originations Wisr loan book 19% on pcp (FY22 $611M) 781 average credit score of total book as at 30 June 2023 (FY22 780) 19% on pcp (FY22 $780M) Focused on profitability $91.9M2 in operating revenue $(1.6)M3 EBTDA 55% (FY22 $59.4M) on pcp 78% (FY22 $(7.2)M) improvement on pcp 1.25% On-balance sheet 90+ day arrears as at 30 June 2023 (0.98% as at 30 June 2022) Strong balance sheet $200M ABS transaction, Wisr Independence Trust 2023-1, 2.58% over one-month BBSW Wisr well capitalised with cash balance of $23.1M Includes $21.7M unrestricted cash and $1.4M loans for sale. Refer to pg 15 for full detail Proprietary Financial Wellness Platform 758K+ Wisr Financial Wellness Platform profiles 17% on pcp (647K as at 30 June 2022) $6.3M in round ups paid off customer debt as at 30 June 2023 1 2 Loan originations audited Revenue audited and percentage increase is on previous corresponding period (PCP) 3 Excludes $1.1M restructuring costs 11 Positive operating cash flow delivered1 $8M $6M $4M $2M $0M -$2M -$4M -$6M -$8M -$10M FY21 FY222 FY23 We responded to changing macroeconomic conditions in FY23 with a series of material operating expense reductions, implemented in Q1FY23 and Q4FY23, while also growing revenue. This has had a materially positive impact, delivering $7.4M of operating cash flow (excluding $1.1M one-off restructuring costs), a 386% improvement on FY22 ($(2.6M)). Wisr YOY revenue growth3 $91.9M $59.4M $27.2M FY21 FY22 FY23 Operating cash flow is audited and on a cash basis per the 4E versus EBTDA (audited) which is a profit and loss statement metric. Source: FY23 (Appendix and Financials) Includes one-off Olympics & Brand campaign spend Revenue audited 1 2 3 12 WISR LIMITED • ANNUAL REPORT 2023Wisr YOY lending platform growth4 Total loan originations (cumulative, to scale) Yearly loan originations (number) $1.6B $495M $1.2B $611M $611M $367M $245M $137M $21.5M $3.6M $39M $18M $109M $70M FY17 FY18 FY19 FY20 FY21 FY22 FY23 Wisr YOY loan book balance5 $931M $780M $384M $90M FY20 FY21 FY22 FY23 4 5 As previously advised in Q2FY23, Wisr has deliberately moderated loan origination growth to maintain balance sheet strength and prioritise profitability Loan book includes all loans in WH1, WH2, Freedom Trust 2021-1, Freedom Trust 2022-1, Independence 2023-1, and balance sheet, excludes off-balance sheet of $8.8M as at 30 June 2023 13 Strong funding platform • WH1 has $450M of committed funding and an undrawn capacity of $75M, while WH2 has committed funding of $250M and an undrawn capacity of $75M (total $150M available) • Wisr has now delivered three ABS transactions – Freedom 2021, Freedom 2022 and Independence 2023 • A debt facility (Head Company) is in place which is fully drawn to $25M. The facility is due to mature in July 2025 • Work is continuing on a third warehouse with a new senior funder and ability to fund both PL and SVL (senior funder credit approval received) • Credit approval was received for an • In June 2023, Wisr released term deal capital with the sale of the $3.6M Freedom 2021 G1 notes intraday overdraft facility for working capital requirements and is currently going through implementation Funding as at 30 June 2023 $150M $955M $1.2B $1.0B $800M $600M $400M $200M $1.1B $25M $148M $68M $165M $250M $450M Drawn Available Total facility WH1 WH2 Independence 2023 Freedom 2021 Freedom 2022 Head Co 14 WISR LIMITED • ANNUAL REPORT 2023Capital position CAPITAL ASSETS DESCRIPTION Restricted cash $31.9M Cash held in the Wisr Warehouses consists of customer loan repayments (principal and interest) and unutilised funds from note subscriptions (predominantly third-party debt). Use of these funds is restricted to the purposes of funding loans and operating the Wisr Warehouses e.g. Trustee fees. Unrestricted cash $21.7M Cash on hand available to be used for any purpose of the business. Loans available for sale $1.4M Loans held on the balance sheet as at the reporting date are available to sell to the Wisr Warehouses, thereby effectively being a cash equivalent. Wisr equity holding in Wisr Warehouses $48.3M Wisr’s equity investment in the Wisr Warehouses: • Freedom 2021 • WH1 ($19.6M) ($3.6M, call date1 March 2024) • Freedom 2022 ($11.3M, call date1 September 2025) • WH2 ($5.4M) • Independence 2023 ($8.4M, call date1 December 2026) Cash per balance sheet $53.6M Cash and cash equivalents $23.1M Wisr equity holding in Wisr Warehouses $48.3M 1 Call dates are forecasted based on expected prepayment rates and actual dates may vary 15 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL WELLNESS PLATFORM (FWP) FINANCIAL WELLNESS IS A SMART STRATEGY Wisr’s Financial Wellness Platform (FWP) helps customers better understand and engage with their financial life. It promotes better financial decision-making for everyone – no matter their level of understanding or financial position. It’s Wisr’s competitive advantage; we’re the only consumer finance provider in Australia with this offering, making us more than just a lender. 16 WISR LIMITED • ANNUAL REPORT 2023The FWP offers proven benefits for our customers who engage with it. It allows users to: ✓ Get a personalised experience based on their next major money moment ✓ See their liabilities and balances ✓ Check and monitor their credit scores ✓ Fine-tune their financial knowledge ✓ Move from subprime to prime credit scores ✓ Round up their money to pay down debt or save ✓ Receive personalised product offers and pricing ✓ Access smarter personal and secured car loans ✓ Apply, manage and pay down their Wisr loan ✓ Learn the psychology of why they spend and change habits Financial Wellness Platform profiles (Cumulative, to scale) 758K 647K 451K 251K 73K FY19 FY20 FY21 FY22 FY23 17 WISR’S FINANCIAL WELLNESS PLATFORM (FWP) Smart decisions at any stage of a customer’s life, anytime, in their pocket With Wisr App, customers can access a wide range of tools to help them make smarter decisions, throughout their financial journey CREDIT SCORES • Free access to Equifax and Experian credit scores • Overview of credit insights and liabilities, indicates eligibility for a Wisr loan • Alerts when scores change SMART MOVES • Surfaces the next best financial action based on the customer’s circumstances • Personalised interactive lessons to help improve money habits Where do I stand financially? What’s my next smart decision? 18 WISR LIMITED • ANNUAL REPORT 2023LOAN OFFER By accompanying customers through significant money moments, we have a data-rich picture of a customer’s financial situation, behaviour and interests. When a customer’s financial situation or behaviour changes, we can propose relevant next steps at the right time, including personalised loan offers. Can I access credit? CREDIT SCORES Wisr knows when customers’ credit scores improve enough to make them eligible for a loan offer ROUND UPS Transaction data from round ups helps indicate spending patterns and potential serviceability How do I reach my money goals? ROUND UPS • Send digital spare change from daily purchases, towards a debt or other money goal How do I manage my loan? LOAN MANAGEMENT • Monitor repayment progress • Pay loans back faster using round ups • Self-service functionality used frequently by early arrears customers, including extra repayments, changing repayment frequency and direct debit account 19 FINANCIAL WELLNESS PLATFORM (FWP) Wisr’s FWP improves loan customers’ financial health Wisr loan customers who engaged with the FWP during FY23 were on average 41%1 further ahead on their loan repayment balance compared to loan customers who didn’t engage with the FWP. The FWP can help loan customers save on interest. For example, if a customer on a $30K loan pays an extra $50 per month through round ups, the loan will be paid off 5 months2 ahead of schedule. Based on average comparison of engaged and not engaged loan customers that are current and not in arrears between 01 July 2022 – 30 June 2023 Calculation is based on average loan size of $30k and a baseline interest rate of 8.79% 1 2 20 WISR LIMITED • ANNUAL REPORT 2023Award-winning momentum 21 Executive Leadership Team Andrew has over 20 years of experience in Financial Services across consumer finance, investment banking, private equity and assurance and has been with Wisr since 2017. Prior to Wisr, Andrew worked at Macquarie Capital, in both domestic and offshore markets, as well as KPMG. Andrew is focused on continuing to scale Wisr, providing exceptional products to customers that are underpinned by a clear capital and risk management strategy. Andrew holds a Bachelor of Business and is a Chartered Accountant. Joanne is a respected leader of multiple disciplines in Banking, with over 18 years of experience ranging from credit risk, product management, pricing, analytics and strategic project delivery. Joanne is passionate about using data and analytics to solve business problems, drive profitable growth, streamline processes and improve customer experience. Before Wisr, Joanne was General Manager of Unsecured Risk at the Commonwealth Bank, where she led the integration project for the bank’s Comprehensive Credit Reporting compliance. Ben has worked in and led product and technology teams across three continents for over 20 years across B2B and B2C, from startups with successful exits through to IBM. He has spanned all product life cycle stages, from building creative new products to nurturing mature cash cows. Before joining Wisr three years ago, Ben led the product team at THE ICONIC. At Wisr, he leads the product and technology functions. James has over 15 years of experience building brands, delivering growth, and leading high-performing teams. He is passionate about solving customer problems through combining purpose, technology, and people. Since joining Wisr in 2018 James has been responsible for building Wisr’s purpose-led brand, communications, and customer experience. He has worked with a number of established financial services and challenger brands, including Virgin Mobile, Bankwest, AMEX and ING. Andrew Goodwin CHIEF EXECUTIVE OFFICER & CHIEF FINANCIAL OFFICER Joanne Edwards CHIEF OPERATING OFFICER Ben Berger CHIEF PRODUCT OFFICER James Goodwin CHIEF CUSTOMER & MARKETING OFFICER 22 WISR LIMITED • ANNUAL REPORT 2023Peter joined Wisr in 2015 and has led the growth of Wisr’s broker channel. He is a senior business executive with over 30 years of global banking, finance and project delivery experience with leading international investment banks Citibank, UBS AG, Bank of America Merrill Lynch and ABN AMRO. Peter brings to Wisr a broad set of customer acquisition and sales leadership skills with deep experience operating high-volume, online financial product businesses. David is a commercial lawyer with over 15 years of experience working in law firms and as an in-house lawyer in Australia and internationally. Before joining Wisr, David advised on legal and business affairs across Asia-Pacific as Senior Legal Counsel (APAC) at IMG/Endeavor (NYSE: EDR). David was previously an Associate at global law firm Taylor Wessing LLP in London, UK. David holds a Bachelor of Laws (LLB) and Bachelor of Commerce (BComm – Finance) from the University of Melbourne. Kate has over 14 years of experience building people and recruitment programs in the People and Culture space. Formerly in Silicon Valley, Kate worked on building a global recruitment program at Salesforce and developed a rich end-to-end employee experience at tech start-up Inkling. Kate moved to Sydney in 2016 and has built the Wisr Employee Experience, HR and Recruitment functions from the ground up. Peter Beaumont CHIEF COMMERCIAL OFFICER David King GENERAL COUNSEL Kate Renner HEAD OF EMPLOYEE EXPERIENCE 23 Board of Directors Mr Brown is a highly experienced senior executive, board member, adviser and investor with over 20 years of experience across investment banking and technology in Australia and the United States. He is the Founder and Managing Director of independent investment and corporate advisory firm Alluvion Capital. Prior to Alluvion Capital, Mr Brown was Chief Financial Officer and Executive Director of a high-growth, global enterprise SaaS business. Prior to that, Mr Brown was a Managing Director at Macquarie Capital, where he spent 12 years in Sydney and New York with a focus on M&A, capital markets and principal investing. Mr Brown is also a non-executive director of EncompaaS Software Limited, Thinxtra Limited, Learning Vault Pty Limited and Upwire Pty Limited and an active investor in early-stage, high-growth technology businesses. Mr Nantes has over 25 years of experience in Financial Services, Private Equity, Tax and Accounting, Corporate Finance, Capital Markets, and M&A. He is also the Executive Chairman of Income Asset Management (ASX: IAM), a leading financial services company in Australia with over $3B in AUA, as well as a non- executive director of 1st Group (ASX:1ST), a newly merged leading Healthtech company in Australia, and a non-executive director of Thinxtra, a public non-listed IOT technology company. Mr Nantes has a strong reputation for building profitable and fast-growing businesses, especially those reliant on technology, product innovation, and market disruption with strict compliance/ governance requirements, having previously also held roles such as Group Head of WHK/Crowe Horwath Wealth Management, CEO Prescott Securities, and Executive roles at St George Bank/ Bank SA and financial advisory roles at Colonial State Bank. Ms Lyall is a highly experienced senior executive, board member and strategic adviser with over 35 years of experience across finance, banking, government and fintech in Australia and the United Kingdom. She is a Partner at Seed Space Venture Capital, the Co-Founder of not-for-profit Seed Money Australia, non- executive director of several unlisted fintech companies, and is a NED on the board of the peak industry body Fintech Australia. Ms Lyall’s extensive experience in the Australian and British Financial Services sectors includes roles at the Chicago Mercantile Exchange, Nasdaq and the London Stock Exchange. Most notably, Non-Executive Director Deutsche Bank UK Bank, sitting on the Bank’s Board Risk Committee (BRC), the Listed Derivatives Risk and Compliance Committee (LDRCC), and the Nomination Committee as Chair. Matthew Brown INTERIM CHAIR & NON- EXECUTIVE DIRECTOR BCom; LLB John Nantes NON-EXECUTIVE CHAIR LLB; BCom; B.A., DFP Cathryn Lyall NON-EXECUTIVE DIRECTOR B.A.; M.A 24 WISR LIMITED • ANNUAL REPORT 2023Mr Swanger has extensive board experience, including Macquarie Bank’s major funds management entity, Macquarie Investment Management Limited and a total of 15 internal and external boards since 2003. Since Macquarie, Mr Swanger has invested in and advised a large portfolio of technology companies across finance, social impact, and health. More specifically, in areas related to Wisr, Mr Swanger was Chairman of 5 of the largest debt-listed investment companies in Australia and New Zealand issued over the past decade and more recently worked with Australia’s largest corporate bond and securitisation distribution specialists and is on the Investment Committee of a large SME direct lending fund. Craig Swanger NON-EXECUTIVE DIRECTOR BCom (Hons); SIA GD Kate Whitney NON-EXECUTIVE DIRECTOR B.A. Ms Whitney is a highly experienced senior executive with over 25 years of experience in Australian Consumer Law, accelerating growth, product expansion and driving customer acquisition through data and analytics across marketing, advertising, subscription television, FMCG, financial services, telecommunication, luxury and retail. From 2020-2022, she held the position of Chief Marketing and Growth Officer for the innovative foodservice business Marley Spoon Australia (ASX: MMM), and in early 2023 was appointed as Chief Digital and Technology Officer for Treasury Wine Estates (ASX: TWE). In her current role, Ms Whitney has oversight of all the company’s technology, cyber-security and information systems globally, as well as the data, insights and analytics division and capability. Prior to her current role, Ms Whitney spent six years as the Director of Digital at Pernod Ricard, both in the Australian and USA businesses and between 2011 and 2014, she was the General Manager of Marketing at David Jones, which included oversight of the credit card portfolio. Her key achievements include driving $250M in revenue growth for David Jones via the Amex Storecard deal, and during her tenure at Marley Spoon, Ms Whitney saw the company’s revenue more than double. 25 WISR LIMITED • ANNUAL REPORT 2023 WISR LIMITED • ABN 80 004 661 205 FINANCIAL REPORT for the year ended 30 June 2023 26 WISR LIMITED • ANNUAL REPORT 2023WISR LIMITED • ANNUAL REPORT 2023 DIRECTORS’ REPORT For the year ended 30 June 2023 The directors present their report, together with the financial statements, on the consolidated entity (also referred to hereafter as the Group) consisting of Wisr Limited (referred to hereafter as the Company or Parent Entity) and the entities it controlled at the end of, or during, the year ended 30 June 2023. DIRECTORS The following persons were directors of the Company during the whole of the financial year and up to the date of this report, unless otherwise stated: Name John Nantes1 Position Non-Executive Chair Craig Swanger Non-Executive Director Matthew Brown1 Non-Executive Director Cathryn Lyall Kate Whitney Non-Executive Director Non-Executive Director Particulars of each director’s experience and qualifications are set out later in this report. PRINCIPAL ACTIVITIES During the financial year, the Group’s primary activity was writing personal loans and secured vehicle loans for 3, 5 and 7-year maturities to Australian consumers. REVIEW OF OPERATIONS Key Group highlights include: Financial performance (cid:0) Operating revenue up 55% to $91.9M (FY22: $59.4M) (cid:0) 78% EBTDA improvement (FY23: $(1.6)M2 vs FY22: $(7.2)M) (cid:0) Continued NIM expansion, now delivering a NIM run rate (June 2023) of c. 5% on new business written 1 Mr M Brown was appointed Interim Chair from 21 August 2023 as per ASX release on 21 August 2023. 2 Excludes $1.1M restructuring costs. 27 WISR LIMITED • ANNUAL REPORT 2023 DIRECTORS’ REPORT For the year ended 30 June 2023 Review of operations (cont.) Loan book (cid:0) Loan book growth of 19% to $931M (FY22: $780M) (cid:0) 90+ Day arrears of 1.25% (FY22: 0.98%) and 781 average credit score of total book (FY22: 780) (cid:0) Total new loan originations down 19% to $495M (FY22: $611M) following deliberate moderation of loan origination volume to maintain a strong balance sheet and prioritise profitability (cid:0) Total loan originations $1.6B as at 30 June 2023 Balance sheet and funding (cid:0) Cash balance (excluding restricted cash) $23.1M as at 30 June 2023, consisting of $21.7M unrestricted cash and $1.4M loans available for sale (cid:0) Equity note investments within Wisr Warehouses of $48.3M (cid:0) Sale of Freedom 2021 G1 notes (settled June 2023), releasing additional capital of $3.6M into the business (cid:0) The Company's third ABS transaction and inaugural asset-backed securities deal for the secured vehicle loan product, the $200M Wisr Independence Trust 2023-1 (Independence23) (cid:0) Strengthened the balance sheet by securing a new $25M3 head company debt facility (Q2FY23) (cid:0) Rolled-forward Wisr Warehouse’s (WH1 & WH2) for another 12 months (Q2FY23) (cid:0) Received credit approval from another Big Four bank for a third warehouse facility Financial Wellness Platform (cid:0) 17% increase in the Wisr Financial Wellness Platform (FWP), with over 758,000 customer profiles (FY22: 647,000) at 30 June 2023 (cid:0) Launch of the Company’s new technology product, Wisr Today, in Q2FY23 with over 28K downloads FOCUS ON PROFITABILITY OVER HIGH-GROWTH Wisr began FY23 with the objective of achieving profitability4 within 12 months. In response to macroeconomic conditions, through prudent and proactive adjustment of the Company’s strategy and cost base, Wisr has successfully delivered profitability on a run-rate basis with two positive EBTDA quarters in FY23 (Q2 and Q4) while maintaining a robust balance sheet. The material cost out, which included headcount reductions (Q1FY23 and Q4FY23) and other strategic decisions (including the deliberate moderation of loan origination volume) made by management, have had a materially positive impact, with the Company delivering three positive operating cash flow quarters (Q2FY23, Q3FY23 and Q4FY23) while delivering 55% revenue 3 $25M drawn after certain milestones were achieved. 4 Profitability is on a run-rate EBTDA basis and is subject to broader market conditions, including any significant volatility events, the level of global inflation and interest rates, and the impact of any geopolitical events. 28 WISR LIMITED • ANNUAL REPORT 2023 DIRECTORS’ REPORT For the year ended 30 June 2023 Review of operations (cont.) growth (FY23: $91.9M v FY22: $59.4M) and a 78% EBTDA improvement (FY23: $(1.6)M5 vs FY22: $(7.2)M). In addition, the Company has successfully completed a number of significant funding and capital management initiatives to improve balance sheet strength and flexibility as the Company continues to navigate an uncertain short-term environment. In Q2FY23, Wisr strengthened its balance sheet by securing a new $25M6 debt facility (head company), with a maturity date 1 July 2025. Part of the proceeds of the new facility was used to repay the Company’s existing $6.5M head company debt facility. Wisr has rolled forward WH1 and WH2 for another 12 months and received credit approval from another Big Four bank for a third warehouse facility. This new facility will further diversify Wisr’s funding sources, enhance growth through funding capacity and add further balance sheet robustness. However, following the deliberate moderation of loan origination volume, the facility was not required in FY23; the market will be updated on further developments as they become available in FY24, closer to go-live. Wisr also received credit approval from a Big Four bank for an intraday credit facility to further alleviate balance sheet pressure and remains committed to strong cost control in the near term. Following the significant reduction in short-term growth aspirations in lending in response to the macroeconomic environment, as at 30 June 2023, Wisr reached $1.6B in total loan originations since inception, and FY23 delivered $495M in new loan originations, a 19% decrease on FY22 ($611M). LOAN BOOK, RISK AND FINANCIAL POSITION As at 30 June 2023, WH1, WH2, Freedom21, Freedom22, Independence23 and on-balance sheet had a combined loan book balance of $931M, an increase of 19% (FY22: $780M). The high quality of Wisr’s prime loan portfolio continued to be demonstrated with on-balance sheet 90+ Day arrears increasing only slightly to 1.25% (FY22: 0.98%), which is within risk appetite and reflective of broader macroeconomic conditions. The FY23 average credit score of the total book is steady at 781 (FY22: 780). AASB 9 requires a forecast of lifetime expected credit losses that uses a three-staged approach based on the credit profile of the receivable. The Group calculates Expected Credit Loss (“ECL”) using three main components, the exposure at default, the probability of default and the loss given default. The total provision held as at 30 June 2023 is $26.7M (2.9%) an increase from $18.9M (FY22). The total loan impairment expense for FY23 was $22.3M (2.4%), representing $7.8M of incremental provisions and $14.5M of net losses ($17.5M gross losses net of $3.0M recoveries). The Company is well capitalised with a cash balance (excluding restricted cash) of $23.1M, consisting of $21.7M unrestricted cash and $1.4M loans available for sale as at 30 June 2023. 5 Excludes $1.1M restructuring costs. 6 $25M drawn after certain milestones were achieved. 29 WISR LIMITED • ANNUAL REPORT 2023 DIRECTORS’ REPORT For the year ended 30 June 2023 Review of operations (cont.) EXPENSES The operational leverage in the business is evidenced by 55% operating revenue growth compared to a 20% decrease in operating expenses (“Opex”) (FY23 Opex $(32.8)M7 vs FY22 Opex $(41.0)M). A significant cost reduction process in FY23 drove this. Other expense items include: (cid:0) An increase in provision for expected credit loss expense (non-cash) of $22.3M (FY22 $16.4M) due to growth in loan origination volume and loan book. (cid:0) An increase in finance expense of $46.2M (FY22 $18.8M) due to growth in loan origination volume and loan book, along with higher funding costs. (cid:0) A marginal increase in employee benefits expense of $20.2M (FY22 $18.9M) with $1.1M related to restructuring costs. (cid:0) A decrease in marketing expense of $2.3M (FY22 $12.1M) due to moderated growth strategy and cost reduction process. WISR FINANCIAL WELLNESS PLATFORM In Q1FY23, the Company deliberately reduced the material investment in the Wisr FWP to further drive the push to profitability8. Despite the reduction in spending, the Wisr FWP grew by 17%, with over 758,000 customer profiles (FY22: 647,000) at 30 June 2023. In Q2FY23, the FWP suite of products was bolstered by the launch of the Company’s new technology product, Wisr Today, a psychology-led money coaching app that helps users build smarter habits and improve holistic financial health. Since its launch, there have been over 28K downloads. Wisr Finance Pty Ltd9 holds a financial services licence (AFSL 458572) to provide general financial product advice via the Wisr Today app. GOVERNANCE Wisr faces a broad range of risks reflecting its business operations as a non-bank consumer lender. The material business risks to the business are liquidity, licenses, and technology (which including IT). The Board is responsible for setting risk appetite and approving and reviewing the risk management strategy and framework; this includes the 14-point Enterprise Risk Management Register. The Board also ensures senior management has identified key risks, that those risks are managed and controlled appropriately and endorses the Risk Management plan, which is set out to manage all risks to remain in risk appetite. Management is then responsible for implementing the Board approved risk management strategy and risk management plan. External auditors provide Independent assurance to the Board on the adequacy and effectiveness of management controls for risk. 7 Excludes $1.1M restructuring costs. 8 Profitability is on a run-rate Cash EBTDA basis and is subject to broader market conditions, including any significant volatility events, the level of global inflation and interest rates, and the impact of any geopolitical events. 9 A 100% subsidiary of Wisr Limited. 30 WISR LIMITED • ANNUAL REPORT 2023 DIRECTORS’ REPORT For the year ended 30 June 2023 Review of operations (cont.) Wisr has the following Committees in place to foster innovation and continuous improvement in efficiencies across all business operations: (cid:0) Quarterly Board Audit and Risk Committee, Chaired by Non-Executive Director, Matthew Brown10 (cid:0) Risk Management Committee, Chaired by Chief Operating Officer, Joanne Edwards (cid:0) Credit Committee, Chaired by Chief Operating Officer, Joanne Edwards To further protect the security of the business and in preparation for joining the Open Banking environment, in FY23, Wisr increased its scope of privacy protections and cyber security framework. Chief Product Officer Ben Berger leads the protection of customer information and information assets, and the Risk Management Committee oversees its management. OUTLOOK – FY24 The macroeconomic conditions of FY23 required recalibration of the business through prudent fiscal management to deliver run-rate profitability11 in the short term and set the business up for sustainable long-term profitability. The Company’s focus in FY24 is to maintain a strong balance sheet and continue delivering profitability11 by focusing on NIM expansion. Combined with a clear capital management strategy, Wisr is in a strong position to safeguard the current macroeconomic climate. When the conditions are deemed appropriate, the business has measures in place to pivot quickly and recommence scaling of loan origination volume. DIVIDENDS There were no dividends declared or paid in the financial year. SIGNIFICANT CHANGES IN STATE OF AFFAIRS There were no significant changes in the state of affairs of the Group during the financial year. EVENTS SINCE THE END OF THE FINANCIAL YEAR On 16 August 2023, Wisr announced that Wisr’s Chief Financial Officer, Andrew Goodwin, had been appointed to the role of Chief Executive Officer, effective immediately, and Joanne Edwards was promoted to Chief Operating Officer. This followed the termination of the employment of Chief Executive Officer, Anthony Nantes, by the Wisr Board. On 21 August 2023, Matthew Brown was appointed interim Chair following John Nantes' leave of absence per the ASX release on 21 August 2023. 10 Mr M Brown was appointed Interim Chair from 21 August 2023 as per ASX release on 21 August 2023. 11 Profitability is on a run-rate Cash EBTDA basis and is subject to broader market conditions, including any significant volatility events, the level of global inflation and interest rates, and the impact of any geopolitical events. 31 WISR LIMITED • ANNUAL REPORT 2023 DIRECTORS’ REPORT For the year ended 30 June 2023 ENVIRONMENTAL MATTERS The Group is not subject to any significant environmental regulations under Australian Commonwealth or State law. INDEMNITY AND INSURANCE OF AUDITOR The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company or any related entity against a liability incurred by the auditor. During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity. INFORMATION ON DIRECTORS The names and details of the Company's directors in office during the financial year and until the date of this report are presented below. John Nantes, Non-Executive Chair12 Qualifications Experience LLB; B.Comm.; B.A., DFP Mr Nantes has over 25 years of experience in Financial Services, Private Equity, Tax and Accounting, Corporate Finance, Capital Markets, and M&A. He is also the Executive Chairman of Income Asset Management (ASX: IAM), a leading financial services company in Australia with over $3B in AUA, as well as a non- executive director of 1st Group (ASX:1ST), a newly merged leading Healthtech company in Australia, and a non-executive director of Thinxtra, a public non- listed IOT technology company. Mr Nantes has a strong reputation for building profitable and fast-growing businesses, especially those reliant on technology, product innovation, and market disruption with strict compliance/governance requirements, having previously also held roles such as Group Head of WHK/Crowe Horwath Wealth Management, CEO Prescott Securities, and Executive roles at St George Bank/ Bank SA and financial advisory roles at Colonial State Bank. Interest in shares and options as at 30 June 2023 Ordinary shares held: 16,081,370 Performance rights held: Nil Former directorships (last 3 years) None Other current directorships Income Asset Management Group Ltd (ASX: IAM) 1st Group Ltd (ASX: 1ST) 12 Mr M Brown was appointed Interim Chair from 21 August 2023 as per ASX release on 21 August 2023. 32 WISR LIMITED • ANNUAL REPORT 2023 DIRECTORS’ REPORT For the year ended 30 June 2023 Craig Swanger, Non-Executive Director Qualifications Experience BCom (Hons); SIA GD Mr Swanger has extensive board experience, including Macquarie Bank’s major funds management entity, Macquarie Investment Management Limited and a total of 15 internal and external boards since 2003. Since Macquarie, Mr Swanger has invested in and advised a large portfolio of technology companies across finance, social impact, and health. More specifically, in areas related to Wisr, Mr Swanger was Chairman of 5 of the largest debt-listed investment companies in Australia and New Zealand issued over the past decade and more recently worked with Australia’s largest corporate bond and securitisation distribution specialists and is on the Investment Committee of a large SME direct lending fund. Interest in shares and options as at 30 June 2023 Ordinary shares held: 5,866,666 Performance rights held: Nil Former directorships (last 3 years) None Other current directorships Income Asset Management Group Ltd (ASX: IAM) Matthew Brown, Non-Executive Director13 Qualifications Experience B.Comm; LLB Mr Brown is a highly experienced senior executive, board member, adviser and investor with over 20 years of experience across investment banking and technology in Australia and the United States. He is the Founder and Managing Director of independent investment and corporate advisory firm Alluvion Capital. Prior to Alluvion Capital, Mr Brown was Chief Financial Officer and Executive Director of a high-growth, global enterprise SaaS business. Prior to that, Mr Brown was a Managing Director at Macquarie Capital, where he spent 12 years in Sydney and New York with a focus on M&A, capital markets and principal investing. Mr Brown is also a non-executive director of EncompaaS Software Limited, Thinxtra Limited, Learning Vault Pty Limited and Upwire Pty Limited and an active investor in early-stage, high-growth technology businesses. Interest in shares and options as at 30 June 2023 Ordinary shares held: 475,000 Performance rights held: 1,937,000 Former directorships (last 3 years) None Other current directorships None 13 Mr M Brown was appointed Interim Chair from 21 August 2023 as per ASX release on 21 August 2023. 33 WISR LIMITED • ANNUAL REPORT 2023 DIRECTORS’ REPORT For the year ended 30 June 2023 Cathryn Lyall, Non-Executive Director Qualifications Experience B.A.; M.A Ms Lyall is a highly experienced senior executive, board member and strategic adviser with over 35 years of experience across finance, banking, government and fintech in Australia and the United Kingdom. She is a Partner at Seed Space Venture Capital, the Co-Founder of not-for-profit Seed Money Australia, non-executive director of several unlisted fintech companies, and is a NED on the board of the peak industry body Fintech Australia. Ms Lyall’s extensive experience in the Australian and British Financial Services sectors includes roles at the Chicago Mercantile Exchange, Nasdaq and the London Stock Exchange. Most notably, Non-Executive Director Deutsche Bank UK Bank, sitting on the Bank’s Board Risk Committee (BRC), the Listed Derivatives Risk and Compliance Committee (LDRCC), and the Nomination Committee as Chair. Interest in shares and options as at 30 June 2023 Ordinary shares held: Nil Performance rights held: Nil Former directorships (last 3 years) None Other current directorships None Kate Whitney, Non-Executive Director Qualifications Experience B.A. Ms Whitney is a highly experienced senior executive with over 25 years of experience in Australian Consumer Law, accelerating growth, product expansion and driving customer acquisition through data and analytics across marketing, advertising, subscription television, FMCG, financial services, telecommunication, luxury and retail. From 2020-2022, she held the position of Chief Marketing and Growth Officer for the innovative foodservice business Marley Spoon Australia (ASX: MMM), and in early 2023 was appointed as Chief Digital and Technology Officer for Treasury Wine Estates (ASX: TWE). In her current role, Ms Whitney has oversight of all the company’s technology, cyber- security and information systems globally, as well as the data, insights and analytics division and capability. Prior to her current role, Ms Whitney spent six years as the Director of Digital at Pernod Ricard, both in the Australian and USA businesses and between 2011 and 2014, she was the General Manager of Marketing at David Jones, which included oversight of the credit card portfolio. Her key achievements include driving $250M in revenue growth for David Jones via the Amex Storecard deal, and during her tenure at Marley Spoon, Ms Whitney saw the company’s revenue more than double. Interest in shares and options as at 30 June 2023 Ordinary shares held: Nil Performance rights held: Nil Former directorships (last 3 years) None Other current directorships None 34 WISR LIMITED • ANNUAL REPORT 2023 DIRECTORS’ REPORT For the year ended 30 June 2023 INFORMATION ON COMPANY SECRETARIES Vanessa Chidrawi Experience May Ho Experience Vanessa is a highly experienced governance professional, having held leadership and executive management roles in companies listed on ASX, TSX, Nasdaq and JSE over the past 17 years. She obtained degrees in law and commerce and then practised as an attorney for twelve years before entering the corporate world. Vanessa has acted as company secretary to a range of companies listed on ASX and TSX and brings with her a wealth of experience in governance management, board advisory, corporate structuring and capital raising in the listed company space. She currently acts as company secretary and governance advisor to four companies listed on ASX. Miss Ho holds a Bachelor of Laws and Bachelor of Business (Accounting Major) degree and has completed a Graduate Diploma in Applied Corporate Governance. She is currently also Financial Controller of the Group. Miss Ho has also had over 3 years’ experience practicing as a solicitor in a private law firm in Sydney. INDEMNIFICATION AND INSURANCE OF OFFICERS AND AUDITORS The Group has entered into agreements with the following to indemnify them against liabilities incurred in their capacity as an officer/director of the Group to the extent permitted by law: (cid:0) John Nantes (cid:0) Craig Swanger (cid:0) Matthew Brown (cid:0) Cathryn Lyall (cid:0) Kate Whitney (cid:0) Christopher Whitehead (cid:0) Vanessa Chidrawi (cid:0) Peter Beaumont (cid:0) Stephen Porges (cid:0) Campbell McComb (cid:0) Leanne Ralph During the financial year, the Group incurred a premium to insure the directors and officers of the Group. Disclosure of the nature of the liabilities covered and the amount of the premium payable is prohibited by the insurance contract. The Group has not otherwise, during or since the end of the financial year, except to the extent permitted by law indemnified or agreed to indemnify an officer or auditor of the company or any of its controlled entities against a liability incurred as such an officer or auditor. MEETINGS OF DIRECTORS The number of meetings of the Company’s Board of Directors and of each board committee held during the year ended 30 June 2023, and the number of meetings attended by each director were: 35 WISR LIMITED • ANNUAL REPORT 2023 DIRECTORS’ REPORT For the year ended 30 June 2023 Directors' Meetings Audit and Risk Committee Meetings Remuneration and Nominations Committee Meetings Number eligible to attend Number attended Number eligible to attend Number attended Number eligible to attend Number attended John Nantes Craig Swanger Matthew Brown Cathryn Lyall Kate Whitney 16 16 16 16 16 16 13 15 16 15 5 - 5 5 - 5 - 5 5 - - 5 5 3 5 - 2 5 3 5 PROCEEDINGS ON BEHALF OF THE COMPANY No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001. NON-AUDIT SERVICES BDO Audit Pty Ltd were appointed Company auditor on 25 September 2020 and will continue in office in accordance with section 327 of the Corporations Act 2001. The Company may decide to engage the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Group are important. The following fees were paid or payable to BDO for non-audit services provided during the year ended 30 June 2023: Non-audit services Taxation services Total $ 5,400 5,400 The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are of the opinion that the services as disclosed in note 19 to the financial statements do not compromise the external auditor's independence requirements of the Corporations Act 2001 for the following reasons: (cid:0) all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and (cid:0) none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the company, acting as advocate for the company or jointly sharing economic risks and rewards. 36 WISR LIMITED • ANNUAL REPORT 2023 DIRECTORS’ REPORT For the year ended 30 June 2023 AUDITOR'S INDEPENDENCE DECLARATION The auditor's independence declaration in accordance with section 307C of the Corporations Act 2001 For the year ended 30 June 2023 has been received and can be found within the financial report. PERFORMANCE RIGHTS At the date of this report, the unissued ordinary shares of Wisr Limited under performance rights are as follows: Effective Grant Date Vesting Determination Date Exercise Price Number under Performance Rights 19 Feb 2019 1 Sept 2019 1 Jul 2021 1 Jul 2022 1 Jul 2022 Total 31 Jul 2021 31 Jul 2022 31 Jul 2023 30 Sep 2023 30 Sep 2024 Nil Nil Nil Nil Nil 440,530 3,833,989 2,948,751 12,097,212 12,097,236 31,417,718 Performance rights holders do not have any rights to participate in any issues of shares or other interests of the Company or any other entity. There have been no performance rights granted over unissued shares or interests of any controlled entity within the Group during or since the end of the reporting period. For details of performance rights issued to directors and executives as remuneration, refer to the remuneration report. CORPORATE GOVERNANCE STATEMENT Our Corporate Governance Statement is available on our website at: www.wisr.com.au/policies- and-governance 37 WISR LIMITED • ANNUAL REPORT 2023 DIRECTORS’ REPORT For the year ended 30 June 2023 REMUNERATION REPORT LETTER FROM CHAIR OF THE REMUNERATION AND NOMINATION COMMITTEE Dear Shareholders, On behalf of the Board, I am pleased to present Wisr’s Remuneration Report (Report) for the financial year ended 30 June 2023 (FY23). Wisr’s remuneration framework, as outlined in the accompanying Report, reflects our commitment to deliver competitive remuneration to attract and retain talented individuals, while aligning the interests of executives, directors and shareholders. Performance-based remuneration forms a significant portion of Wisr’s remuneration strategy for senior executives and KMPs, with recipients receiving less fixed (cash) remuneration than their market value yet having the opportunity to earn attractive levels of total remuneration in the case of substantial outperformance against set targets. The KPIs and behaviours required to qualify for STI and LTI align values, behaviours, and shareholder-interests. In May 2023, after consultation on current best practice, the Wisr Board restructured non- executive director remuneration to fixed cash only. The total value of these packages has been benchmarked to relevant peers on the ASX in terms of fixed (cash) remuneration components and maximum remuneration. Regarding STI, each year the Board assesses several factors including the quality of the results, adherence to risk management policies, achievement against individual objectives and the effectiveness of strategic initiatives implemented to determine the extent to which the overall outcomes adequately reflect actual performance and returns to shareholders. Regarding LTI, share price hurdles are set at levels substantially higher than the prevailing share price to further align interests with shareholders, while managing dilution. This Report is structured to provide shareholders with insights into the remuneration governance, policies, procedures, and practices being applied. Remuneration is a complex topic, particularly when equity-based incentives are included. We trust that should you have any questions about the rationale for our approach or any of the details, that you will let us know. ............................................................... CATHRYN LYALL CHAIR, REMUNERATION AND NOMINATION COMMITTEE 38 WISR LIMITED • ANNUAL REPORT 2023 DIRECTORS’ REPORT For the year ended 30 June 2023 REMUNERATION REPORT (AUDITED) Wisr Limited’s 2023 remuneration report sets out remuneration information for the Company’s directors and other key management personnel. The report contains the following sections: 1. Key management personnel disclosed in this report 2. Remuneration governance 3. Service agreements 4. Details of remuneration 5. Equity instruments held by key management personnel 6. Movement in performance rights 7. Fair value of performance rights 8. Other transactions with key management personnel 1. KEY MANAGEMENT PERSONNEL DISCLOSED IN THIS REPORT The key management personnel are those persons having authority and responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly, including any director (whether executive or otherwise) of the Parent Entity. During the year ended 30 June 2023 and up to the date of this report, the following were classified as key management personnel: Name Position John Nantes14 Non-Executive Chair Craig Swanger Non-Executive Director Matthew Brown14 Non-Executive Director Cathryn Lyall Kate Whitney Non-Executive Director Non-Executive Director Andrew Goodwin Chief Executive Officer (from 16 August 2023) Chief Financial Officer (up to 15 August 2023) Anthony Nantes Chief Executive Officer (up to 15 August 2023) 2. REMUNERATION GOVERNANCE The Board ensures that executive reward satisfies the following key criteria for good reward governance practices: (cid:0) competitiveness and reasonableness; (cid:0) acceptability to shareholders; (cid:0) performance linkage and alignment of executive compensation; (cid:0) transparency; and (cid:0) capital management. 14 Mr M Brown was appointed Interim Chair from 21 August 2023 as per ASX release on 21 August 2023. 39 WISR LIMITED • ANNUAL REPORT 2023 DIRECTORS’ REPORT For the year ended 30 June 2023 Remuneration report (audited) | 2. Remuneration governance (cont.) a. Our remuneration framework Wisr’s remuneration strategy is approved by the Board. A Remuneration and Nominations Committee (RNC) was established on 26 June 2020. The role of the RNC is set out in its charter, which is reviewed annually. Wisr Remuneration Framework 2023 Objectives Attract, motivate and retain executive talent required to deliver strategy Appropriately balance fixed and at-risk components Create reward differentiation to drive performance values and behaviours Create shareholder value through equity alignment Remuneration Component Total Remuneration (TR) Total Fixed Remuneration (TFR) Variable Cash Remuneration (STI) Variable Equity Remuneration (LTI) Amount and Range (Min Rem – Max Rem) Conditions to exceed Min Strategy behind this approach Min Rem 2nd–3rd quartile level based on market comparables Max Rem at 2nd–3rd quartile based on market comparables if LTI hurdles achieved. Must pass all compliance KPIs to exceed Min Rem. In order to reach Max Rem, individual STI hurdles must be exceeded each year, and tenure must be at least 3 years. WZR’s strategy requires executives with experience well beyond what WZR can afford in cash rem. Further there are no guarantees of success, so the framework relies heavily upon at-risk components. TFR is based on market comparables, including ASX-listed peer companies. 0-100% of TFR depending upon position. Not applicable for directors. LTI to generally form 0-85% of TR. 100% of senior executive LTI is at- risk, meaning that the minimum LTI payment is nil for senior executives. n/a Must pass all compliance KPIs to exceed nil, then performance driven according to individual but aligned KPIs. Senior executive LTI linked to substantial share price increases above prevailing share price at the time of issue. Attract and retain high calibre senior executives and directors. Align performance and behaviour in short-term, including risk management, growth, and profitability. Align executives to manage all aspects required for shareholder growth in shareholder value including earnings growth and compliance matters. In accordance with best practice corporate governance, the structure of non-executive director and executive remuneration is separate and distinct. b. Remuneration Structures for non-executive directors Non-executive director remuneration was designed to attract and retain directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders. The Constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from time to time by a general meeting. An amount not exceeding the amount determined is then divided between the directors as agreed. The latest 40 WISR LIMITED • ANNUAL REPORT 2023 DIRECTORS’ REPORT For the year ended 30 June 2023 Remuneration report (audited) | 2. Remuneration governance (cont.) determination was adopted by ordinary resolution passed at the Annual General Meeting held on 24 November 2021 when shareholders approved an increase of the maximum aggregate amount of non-executive director remuneration to $1,000,000 per annum, excluding share-based payments such as performance rights. The aggregate remuneration is reviewed annually. The remuneration for non-executive directors is currently comprised of cash and superannuation contributions. As of May 2023, share-based payments such as performance rights no longer form part of non-executive directors’ remuneration. Retirement allowances for non-executive directors There is no scheme to provide retirement benefits, other than statutory superannuation, to non-executive directors. c. Remuneration Structures for current executives The remuneration aspects for current executives aims to reward executives with a level and mix of remuneration commensurate with the position and responsibilities within the Company and so as to: (cid:0) align the interests of executives with Wisr shareholders; and (cid:0) ensure total remuneration is competitive by market standards in order to attract and retain talented individuals. i. Fixed remuneration The level of fixed remuneration for executives is set so as to provide a base level of remuneration which is both appropriate to the position and is competitive in the market. Executives receive fixed remuneration by way of salary and company superannuation payments. ii. At-risk remuneration Wisr’s performance hurdles, particularly for the LTI, are at the higher end of the market (ASX peer companies) in terms of degree of difficulty. Any STI and LTI will only have value to the executive if the performance hurdles are met and, in the case of share rights, if the share price exceeds the relevant trigger price. In the event of serious misconduct or a material misstatement in the company’s financial statements, the RNC can cancel or defer performance-based remuneration and may also claw back performance-based remuneration paid in previous financial years. In addition, all key management personnel (KMP) have entered into a voluntary escrow agreement in which they agreed to retain all remuneration related equity issued after December 2019 for a period ending 12 months after ceasing employment with the Company. This was not a condition of the LTI Plan, but was voluntarily agreed to by the KMP. 41 WISR LIMITED • ANNUAL REPORT 2023 DIRECTORS’ REPORT For the year ended 30 June 2023 Remuneration report (audited) | 2. Remuneration governance (cont.) iii. Retirement benefits No executives have entered into employment agreements that provide additional retirement benefits. d. Company performance linked to remuneration Given the growth nature of the Company, and the key economic and financial variables as shown in the table below, any awards of LTI are made on the basis of each individual’s contribution to their specific role in the Company to date and their expected importance to the future of the Company. LTI were deemed to provide an appropriate performance incentive for each individual as applicable. 30 June 2023 30 June 2022 30 June 2021 30 June 2020 30 June 2019 $ $ $ $ $ Operating revenue 91.857M 59.392M 27.231M 7.166M 3.043M Loss Dividend (13.154M) (19.905M) (17.639M) (23.535M) (7.731M) nil nil nil nil nil Cash balance 53.576M 71.489M 92.410M 37.973M 11.993M Share price $0.03 $0.07 $0.26 $0.22 $0.15 42 WISR LIMITED • ANNUAL REPORT 2023 DIRECTORS’ REPORT For the year ended 30 June 2023 Remuneration report (audited) (cont.) 3. SERVICE AGREEMENTS The remuneration agreements of key management personnel as at 30 June 2023 are set out below: KMP Position held as at 30 June 2023 and any change during the year Contract details (duration and termination) Agreed gross cash salary per annum incl. superannuation ($) J Nantes Non-executive chair C Swanger Non-executive director M Brown Non-executive director C Lyall Non-executive director K Whitney Non-executive director No determined duration – subject to retirement and re-election rules of the Company’s constitution. No notice required to terminate. No determined duration – subject to retirement and re-election rules of the Company’s constitution. No notice required to terminate. No determined duration – subject to retirement and re-election rules of the Company’s constitution. No notice required to terminate. No determined duration – subject to retirement and re-election rules of the Company’s constitution. No notice required to terminate. No determined duration – subject to retirement and re-election rules of the Company’s constitution. No notice required to terminate. A Goodwin* Chief Financial Officer No fixed term. 6 months’ notice to terminate. A Nantes* Chief Executive Officer No fixed term. 12 months’ notice to terminate. 165,000 (inc GST) 110,000 125,000 125,000 110,000 550,292 (base cash salary per service agreement) 575,292 (base cash salary per service agreement) * Effective 16 August 2023, Mr A Goodwin has been appointed Chief Executive Officer. This followed the termination of employment of Mr A Nantes as Chief Executive Officer. In addition to fixed compensation, the following key management personnel have been granted performance rights to align their compensation with the performance of the Company, as reflected in its share price. Performance rights are granted in tranches and are linked to share prices over designated periods, as per the following table: 43 WISR LIMITED • ANNUAL REPORT 2023 DIRECTORS’ REPORT For the year ended 30 June 2023 Remuneration report (audited) | 3. Service agreements (cont.) KMP M Brown VWAP share price target * No. performance rights that will vest Earliest determination date for vesting Date performance rights lapse if conditions not met $0.3060 $0.3530 $0.4050 $0.7980 360,000 452,000 24 Nov 2021 30 Nov 2024 30 Nov 2022 30 Nov 2024 544,000 30 Nov 2023 30 Nov 2024 581,000 24 Nov 2021 30 Nov 2024 * These Performance Rights would automatically vest for nil consideration on satisfaction of the Vesting Conditions. The Vesting Conditions for the Performance Rights are: (cid:0) The holder being a director/employee of the Company as at the relevant vesting determination dates specified in the table; and (cid:0) The relevant volume weighted average price (VWAP) of the Company’s ordinary shares traded on ASX over any 20-day period exceeds the prices specified in the table. Non-executive director (NED) remuneration was restructured in May 2023 with all NEDs moving to cash remunerations only. In August 2023, Mr M Brown agreed to the cancellation of the performance rights referred to in the table above, for no consideration. 4. DETAILS OF REMUNERATION The following table of benefits and payment details, in respect to the financial year, represents the components of remuneration for each member of the key management personnel of the Group: SHORT TERM BENEFITS POST EMPLOYMENT BENEFITS LONG- TERM BENEFITS SHARE BASED PAYMENTS Cash salary, fees & short- term compensated absences Short-term incentive schemes ($) Superannuation ($) Long service leave ($) Performance Rights ($) Shares ($) Total ($) Performance Related (%) Directors (2023) J Nantes^ C Swanger M Brown C Lyall K Whitney 164,633 111,991 113,122 100,679 99,548 Total: 589,973 - - - - - - - 11,759 11,878 10,571 10,452 44,660 - - - - - - - - 27,896 - - 27,896 Executives (2023) A Goodwin* 483,333 101,000 25,292 21,280 A Nantes* 616,667 117,000 25,292 18,535 Total: 1,100,000 218,000 50,584 39,815 ^ Amount paid to Mr J Nantes includes 10% GST - - - - - - - - - - - 164,633 123,750 - - 152,896 18.25 111,250 110,000 662,529 - - 630,905 16.01 777,494 23.62 - 1,408,399 * Effective 16 August 2023, Mr A Goodwin has been appointed Chief Executive Officer. This followed the termination of employment of Mr A Nantes as Chief Executive Officer. 44 WISR LIMITED • ANNUAL REPORT 2023 DIRECTORS’ REPORT For the year ended 30 June 2023 Remuneration report (audited) | 4. Details of remuneration (cont.) SHORT TERM BENEFITS POST EMPLOYMENT BENEFITS LONG- TERM BENEFITS SHARE BASED PAYMENTS Cash salary, fees & short- term compensated absences Short-term incentive schemes ($) Superannuation ($) Long service leave ($) Performance Rights ($) Shares ($) Directors (2022) J Nantes^ 110,000 C Swanger 54,795 M Brown 48,000 C Lyall 40,000 K Whitney 20,000 C Whitehead 22,831 Total: 295,626 Executives (2022) - - - - - - - - 5,479 - 4,000 2,000 2,283 13,762 - - - - - - - A Nantes 441,667 98,941 23,568 15,876 A Goodwin 354,167 66,941 23,568 8,677 Total: 795,834 165,882 47,136 24,553 ^ Amount paid to Mr J Nantes includes 10% GST Further details of KMP STI remuneration are included below: (cid:0) Mr A Goodwin 89 49 150,338 - - 49 150,525 309 133 442 - - - - - - - - - - Total ($) Performance Related (%) 110,089 60,323 0.08 0.08 198,338 75.80 44,000 22,000 - - 25,163 0.20 459,913 580,361 453,486 1,033,847 17.10 14.79 Mr A Goodwin was eligible to receive an STI of up to $317,000 per annum in FY23, subject to performance criteria as agreed by the Board of Directors from time to time, assessed in the sole discretion of the Board. (cid:0) Mr A Nantes Mr A Nantes was eligible to receive an STI of up to $100,000 per annum, subject to performance criteria as agreed by the Board of Directors from time to time, assessed in the sole discretion of the Board. An amount of $50,000 was approved by the Board of Directors in relation to FY22 which was subsequently paid in FY23. Short-term and long-term incentives established in the year for the above KMPs are also set out in Note 23 of the financial report. Performance conditions set for KMP short-term and long-term incentives (as discussed above and in Note 23 of the financial report) align the KMP interests with the outcomes for shareholders, customers, and staff. The achievement of these performance conditions supports the growth of shareholder value and provides KMPs with the opportunity to earn total remuneration that may exceed market rates. Conversely, if performance conditions are not met, KMP remuneration will be below market rates. 45 WISR LIMITED • ANNUAL REPORT 2023 DIRECTORS’ REPORT For the year ended 30 June 2023 Remuneration report (audited) (cont.) 5. EQUITY INSTRUMENTS HELD BY KEY MANAGEMENT PERSONNEL The table below shows the number of ordinary shares in the Company held by key management personnel. Balance at the start of the year Received as compensation Received on exercise of options or rights Other changes during the year Balance at end of the year Directors (2023) J Nantes 16,081,370 C Swanger 5,866,666 M Brown C Lyall K Whitney Total: 475,000 - - 22,423,036 Executives (2023) A Goodwin* 29,442,237 A Nantes* 57,268,736 Total: 86,710,973 Directors (2022) J Nantes C Swanger M Brown C Lyall K Whitney 13,201,370 4,091,666 350,000 - - C Whitehead 5,830,000 Total: 23,473,036 Executives (2022) - - - - - - - - - - - - - - - - - - - - - - - 16,081,370 - 5,866,666 - - - - 475,000 - - 22,423,036 1,630,000 - 31,072,237 3,500,000 - 60,768,736 5,130,000 - 91,840,973 2,880,000 - 16,081,370 1,600,000 175,000 5,866,666 - - - 1,600,000 125,000 475,000 - - - - - 7,430,000 6,080,000 300,000 29,853,036 A Nantes 47,258,736 - 10,010,000 - 57,268,736 A Goodwin 21,808,903 3,333,334 4,300,000 - 29,442,237 Total: 69,067,639 3,333,334 14,310,000 - 86,710,973 * Effective 16 August 2023, Mr A Goodwin has been appointed Chief Executive Officer. This followed the termination of employment of Mr A Nantes as Chief Executive Officer. 46 WISR LIMITED • ANNUAL REPORT 2023 DIRECTORS’ REPORT For the year ended 30 June 2023 Remuneration report (audited) (cont.) 6. MOVEMENT IN PERFORMANCE RIGHTS The table below provides the number of performance rights held by Key Management Personnel at 30 June 2022 and 30 June 2023. Name Directors J Nantes C Swanger M Brown C Lyall K Whitney Total: Executives A Goodwin* A Nantes* Total: Rights held as at 30 June 2022 Rights granted during FY23 Rights vested during FY23 Rights lapsed during FY23 Rights held as at 30 June 2023 - - 1,937,000 - - 1,937,000 1,630,000 3,500,000 5,130,000 - - - - - - - - - - - - - - - 1,630,000 3,500,000 5,130,000 - - - - - - - - - - - 1,937,000 - - 1,937,000 - - - * Effective 16 August 2023, Mr A Goodwin has been appointed Chief Executive Officer. This followed the termination of employment of Mr A Nantes as Chief Executive Officer. 7. FAIR VALUE OF PERFORMANCE RIGHTS PERFORMANCE RIGHTS GRANTED VESTING CONDITIONS Number Effective grant date Fair Value per right at effective grant date ($) Earliest vesting determination date VWAP Share Price condition ($) Expiry date Directors (2023) M Brown M Brown M Brown M Brown 360,000 24 Nov 2021 0.24582 24 Nov 2021 0.3060 30 Nov 2024 452,000 24 Nov 2021 0.08146 30 Nov 2022 0.3530 30 Nov 2024 544,000 24 Nov 2021 0.04712 30 Nov 2023 0.4050 30 Nov 2024 581,000 24 Nov 2021 0.05614 24 Nov 2021 0.7980 30 Nov 2024 These Performance Rights would automatically vest for nil consideration on satisfaction of the Vesting Conditions. The Vesting Conditions for the Performance Rights are: (cid:0) The holder being a director/employee of the Company as at the relevant vesting determination dates specified in the table; and (cid:0) The relevant volume weighted average price (VWAP) of the Company’s ordinary shares traded on ASX over any 20- day period exceeds the prices specified in the table. The total fair value of the above rights at grant date issued to key management personnel is $183,563. The value of rights differs to the expense recognised as part of each key management 47 WISR LIMITED • ANNUAL REPORT 2023 DIRECTORS’ REPORT For the year ended 30 June 2023 Remuneration report (audited) | 7. Fair value of performance rights (cont.) person’s remuneration in table d) above because this value is the grant date fair value calculated in accordance with AASB 2 Share Based Payment whereby the expense is recognised throughout the vesting period. Non-executive director (NED) remuneration was restructured in May 2023 with all NEDs moving to cash remunerations only. In August 2023, Mr M Brown agreed to the cancellation of the performance rights referred to in the table above, for no consideration. 8. OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL The Company seeks to attract and retain high-quality talent by remunerating its executives fairly and reasonably. During their respective tenures, as part of their remuneration packages, the CEO and CFO have received Long Term Incentives ("LTIs") linked to KPIs. The vesting of LTIs during employment tenure has given rise to Executive personal tax liabilities. In order to enable tax liability management and manage shareholding balances, the Company executed executive loan agreements with the CEO and CFO, with the following key terms: (cid:0) Up to $2.6M total loan amount in aggregate (cid:0) Five-year term (cid:0) Interest will be charged at the benchmark interest rate for the year for the purposes of the Fringe Benefits Tax Assessment Act 1986 (Cth) plus 0.10% During the year ended 30 June 2023, Mr A Goodwin made a drawdown of $220,000 in respect of the above agreement. This is recognised as a Related party transaction in the Consolidated Statement of Financial Position. This concludes the remuneration report, which has been audited. This report is made in accordance with a resolution of directors. …............................................................ MATTHEW BROWN DIRECTOR Sydney 24 August 2023 48 WISR LIMITED • ANNUAL REPORT 2023 AUDITOR’S INDEPENDENCE DECLARATION 49 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 30 June 2023 Revenue Other income Expenses Employee benefits expense Marketing expense Customer processing expense Property expense Other expense Finance expense Depreciation and amortisation expense Loss on investments Provision for expected credit loss expense Share based payment expense Loss before income tax Income tax expense Loss after income tax for the year Loss for the year is attributable to: Owners of Wisr Limited Earnings per share for loss attributable to the owners of Wisr Limited Basic earnings per share Diluted earnings per share Other comprehensive income Note 2 3 2023 $ 2022 $ 91,857,224 59,392,199 - 31 (20,261,961) (18,926,195) (2,263,532) (12,089,987) (4,709,663) (3,688,843) (65,624) (69,473) (6,673,405) (6,197,511) (46,152,209) (18,753,814) (926,275) (931,461) - (1,168,695) (22,323,943) (16,352,472) (1,634,672) (1,118,686) (13,154,060) (19,904,907) - - (13,154,060) (19,904,907) (13,154,060) (19,904,907) Cents (0.97) (0.97) Cents (1.48) (1.48) 4 4 6 30 18 27 27 Gain arising from changes in fair value of cash flow hedging instruments entered into 16 1,688,651 24,300,420 Other comprehensive income for the year, net of tax 1,688,651 24,300,420 Total comprehensive income (loss) for the year (11,465,409) 4,395,513 Total comprehensive income (loss) for the year is attributable to: Owners of Wisr Limited (11,465,409) 4,395,513 The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 50 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2023 ASSETS Cash and cash equivalents Trade and other receivables Loan receivables Other assets Right of use assets Property, plant and equipment Related party loan Derivative financial instruments Intangible assets Total assets LIABILITIES Trade and other payables Provision for employee benefits Lease liability Borrowings Total liabilities Net assets EQUITY Issued capital Reserves Accumulated losses Total equity Note 2023 $ 2022 $ 5 7 6 8 12 24 14 9 10 11 12 13 15 16 16 53,576,843 71,489,070 2,031,621 1,065,176 909,217,193 764,838,727 1,620,362 1,562,249 345,915 1,037,746 279,576 487,866 220,000 - 27,780,456 24,856,717 7,009,219 2,736,735 1,002,081,185 868,074,286 1,320,088 5,435,693 1,249,336 1,307,554 441,204 1,203,052 931,055,661 782,282,354 934,066,289 790,228,653 68,014,896 77,845,633 144,702,718 144,477,325 30,580,043 27,906,702 (107,267,865) (94,538,394) 68,014,896 77,845,633 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. 51 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2023 Balance at 1 Jul 2021 143,678,390 3,250,454 (74,672,545) 72,256,299 Issued capital $ Reserves $ Accumulated losses $ Total equity $ Loss after income tax expense for the year Other comprehensive gain for the year, net of tax Total comprehensive gain / (loss) for the year Transactions with owners in their capacity as owners: - - - - (19,904,907) (19,904,907) 24,300,420 - 24,300,420 24,300,420 (19,904,907) 4,395,513 Costs of raising capital (64,062) - Share based payments (Note 16) - 1,257,883 Transfer of share-based reserve to issued capital on exercise of options 818,997 (818,997) Issue of shares for services rendered 44,000 (44,000) - - - - Transfer of share-based payment reserve - (39,058) 39,058 (64,062) 1,257,883 - - - Balance at 30 Jun 2022 144,477,325 27,906,702 (94,538,394) 77,845,633 Balance at 1 Jul 2022 144,477,325 27,906,702 (94,538,394) 77,845,633 - (13,154,060) (13,154,060) 1,688,651 - 1,688,651 1,688,651 (13,154,060) (11,465,409) Loss after income tax expense for the year Other comprehensive gain for the year, net of tax Total comprehensive gain / (loss) for the year Transactions with owners in their capacity as owners: Costs of raising capital Share based payments (Note 16) - - - - - - 1,634,672 Transfer of share-based reserve to issued capital on exercise of options 201,393 (201,393) Issue of shares for services rendered 24,000 (24,000) - - - - - 1,634,672 - - - Transfer of share-based payment reserve - (424,589) 424,589 Balance at 30 Jun 2023 144,702,718 30,580,043 (107,267,865) 68,014,896 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 52 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 30 June 2023 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 88,930,737 56,963,941 Payments to suppliers and employees (38,780,698) (43,012,102) Note 2023 $ 2022 $ Interest received on investments and cash Management fees received 50,150,039 13,951,839 666,338 19,473 290,529 643,750 Interest and other finance costs paid (44,855,735) (17,473,304) Proceeds from R&D tax incentive - 280,164 Net cash provided / (used in) operating activities 26 6,251,171 (2,578,078) CASH FLOWS FROM INVESTING ACTIVITIES Payments for plant and equipment (50,431) (371,751) Payment for investments Transfer for term deposit Payment for technology assets Payment for related party loan - - (1,168,695) (561,629) (4,256,340) (2,297,136) (220,000) - Net movement in customer loans (164,145,958) (401,956,547) Net cash used in investing activities (168,672,729) (406,355,758) CASH FLOWS FROM FINANCING ACTIVITIES Costs of raising capital paid Repayment of borrowings - (148,183) (6,500,000) - Proceeds from issuance of borrowings 154,329,418 390,614,465 Transaction costs related to borrowings (2,558,239) (1,769,338) Payments for right of use asset (761,848) (683,596) Net cash provided by financing activities 144,509,331 388,013,348 Net (decrease) / increase in cash and cash equivalents (17,912,227) (20,920,488) Cash and cash equivalents at the beginning of the financial year 71,489,070 92,409,558 Cash and cash equivalents at the end of the financial year 53,576,843 71,489,070 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. 53 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 The consolidated financial statements of Wisr Limited (the Group) For the year ended 30 June 2023 was authorised for issue in accordance with a resolution of the directors on 24 August 2023. The directors have the power to amend and revise the financial report. The consolidated financial statements and notes represent those of Wisr Limited and its controlled entities (the Group). Wisr Limited is a company limited by shares incorporated and domiciled in Australia whose shares are publicly traded on the Australian Stock Exchange (ASX). NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1.1 Basis of preparation These general purpose consolidated financial statements have been prepared in accordance with the Corporations Act 2001, Australian Accounting Standards and Interpretations of the Australian Accounting Standards Board and in compliance with International Financial Reporting Standards as issued by the International Accounting Standards Board. The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless stated otherwise. Except for cash flow information, the financial statements have been prepared on an accrual basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. The statement of financial position is presented on a liquidity basis. Assets and liabilities are presented in decreasing order of liquidity and do not distinguish between current and non- current. All balances are expected to be recovered within 12 months except for intangible assets, property, plant and equipment and financial instruments, for which expected term is disclosed. Where required by Accounting Standards and/or for improved presentation purposes, comparative figures have been adjusted to conform with changes in presentation for the current year. a. Going concern These financial statements have been prepared under a going concern basis. The Directors believe that the Group will have sufficient resources to pay its debts and meet its commitments for at least the next 12 months from the date of this financial report due to the Group having: (cid:0) strong cash reserves; and (cid:0) wholesale funding arrangements for future loan originations; both of which support its operational commitments. 54 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 Note 1. Summary of significant accounting policies (cont.) b. New and revised accounting standards and interpretations The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are mandatory for the current reporting period. Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. 1.2 Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of the Company and all subsidiaries as at 30 June 2023, and the results of all subsidiaries for the year then ended. Subsidiaries are all those entities over which the Company has the power to govern the financial and operating policies, generally accompanying a shareholding of 100% of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Investments in subsidiaries are accounted for at cost in the individual financial statements of the Company, less any impairment charges. 1.3 Foreign currency transactions and balances a. Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in Australian dollars ($), which is Wisr Limited’s functional and presentation currency. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised through profit or loss, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges. 1.4 Impairment of assets Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, and as a minimum, annually. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. 55 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 Note 1. Summary of significant accounting policies | 1.4 Impairment of assets (cont.) The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets, other than goodwill, that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period. 1.5 Investments and other financial assets Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless, an accounting mismatch is being avoided. Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, it's carrying value is written off. a. Financial assets at fair value through profit or loss Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss. b. Impairment of financial assets The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the consolidated entity's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. 56 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 Note 1. Summary of significant accounting policies | 1.5 Investments and other financial assets (cont.) For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss. 1.6 Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position. 1.7 Critical accounting estimates and judgements The Directors evaluate estimates and judgments incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group. Allowance for expected credit losses The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit loss rate for each group. These assumptions include historical collection rates. Capitalised development costs The Group capitalises development costs for multiple projects in accordance with its accounting policy. Initial capitalisation of costs are based on management's judgement where it is probable that sufficient future economic benefits will be derived from the technology assets. Share-based payment transactions The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by taking into account the terms and conditions upon which the instruments were granted. Refer to note 30 for further information. Estimation of useful lives of assets The Group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down. 57 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 Note 1. Summary of significant accounting policies (cont.) 1.8 Fair value measurements The Group measures some of its assets and liabilities at fair value on either a recurring or non- recurring basis, depending on the requirements of the applicable Accounting Standard. Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly (ie unforced) transaction between independent, knowledgeable and willing market participants at the measurement date. As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. To the extent possible, market information is extracted from either the principal market for the asset or liability (ie the market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most advantageous market available to the entity at the end of the reporting period (ie the market that maximises the receipts from the sale of the asset or minimises the payments made to transfer the liability, after taking into account transaction costs and transport costs). The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-based payment arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial instruments, by reference to observable market information where such instruments are held as assets. Where this information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective note to the financial statements. The Group measures and recognises the following assets and liabilities at fair value on a recurring basis after initial recognition: (cid:0) Financial assets at fair value through profit & loss (investment); and (cid:0) Derivative financial instruments at fair value asset or (liability). Hedging ineffectiveness being recognised through profit & loss. a. Fair value hierarchy AASB 13: Fair Value Measurement requires the disclosure of fair value information by level of the fair value hierarchy, which categorises fair value measurements into one of three possible levels based on the lowest level that an input that is significant to the measurement can be categorised into as follows: Level 1 Level 2 Level 3 Measurements based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date Measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Measurements based on unobservable inputs for the asset or liability 58 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 Note 1. Summary of significant accounting policies | 1.8 Fair value measurements (cont.) The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. If all significant inputs required to measure fair value are observable, the asset or liability is included in Level 2. If one or more significant inputs are not based on observable market data, the asset or liability is included in Level 3. b. Valuation techniques The Group selects a valuation technique that is appropriate in the circumstances and for which sufficient data is available to measure fair value. The availability of sufficient and relevant data primarily depends on the specific characteristics of the asset or liability being measured. The valuation techniques selected by the Group are consistent with one or more of the following valuation approaches: (cid:0) Market approach: valuation techniques that use prices and other relevant information generated by market transactions for identical or similar assets or liabilities. (cid:0) Income approach: valuation techniques that convert estimated future cash flows or income and expenses into a single discounted present value. (cid:0) Cost approach: valuation techniques that reflect the current replacement cost of an asset at its current service capacity. Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use when pricing the asset or liability, including assumptions about risks. When selecting a valuation technique, the Group gives priority to those techniques that maximise the use of observable inputs and minimise the use of unobservable inputs. Inputs that are developed using market data (such as publicly available information on actual transactions) and reflect the assumptions that buyers and sellers would generally use when pricing the asset or liability are considered observable, whereas inputs for which market data is not available and therefore are developed using the best information available about such assumptions are considered unobservable. Interest rate swap contracts are valued using a discounted cash flow approach. Future cash flows are estimated based on observable forward interest rates and discounted based on applicable yield curves at the reporting date, taking into consideration the credit risk of the Group and various counterparties. These are deemed to be level 2 inputs as related to both quoted prices and observable inputs to the asset or liability. 1.9 Hedge accounting The Group designates interest rate swaps as hedging instruments as cash flow hedges. At the inception of the hedge relationship, the Group documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument is effective in offsetting changes in cash flows of the hedged item attributable to the hedged risk, which is when the hedging relationships meet all of the following hedge effectiveness requirements: (cid:0) there is an economic relationship between the hedged item and the hedging instrument; 59 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 Note 1. Summary of significant accounting policies | 1.9 Hedge accounting (cont.) (cid:0) the effect of credit risk does not dominate the value changes that result from that economic relationship; and (cid:0) the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item. If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio but the risk management objective for that designated hedging relationship remains the same, the Group adjusts the hedge ratio of the hedging relationship (i.e. rebalances the hedge) so that it meets the qualifying criteria again. a. Cash flow hedges The effective portion of changes in the fair value of derivatives and other qualifying hedging instruments that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve, limited to the cumulative change in fair value of the hedged item from inception of the hedge. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss, and is included in the ‘other gains and losses’ line item. Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognised hedged item. The Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the qualifying criteria (after rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised. The discontinuation is accounted for prospectively. Any gain or loss recognised in other comprehensive income and accumulated in cash flow hedge reserve at that time remains in equity and is reclassified to profit or loss when the forecast transaction occurs. Movements in the hedging reserve in equity are detailed in note 16. 60 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 NOTE 2. REVENUE Interest income on financial assets Effective interest income on financial assets Other revenue from financial assets Interest on cash Total income from financial assets Revenue from contracts with customers Management fees Total revenue from contracts with customers Total revenue DISAGGREGATION OF REVENUE CONSOLIDATED 2023 $ 2022 $ 90,508,276 58,235,149 335,495 666,338 357,152 19,473 91,510,109 58,611,774 347,115 347,115 780,425 780,425 91,857,224 59,392,199 The above provides a breakdown of revenue by major revenue stream. The categories above depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic data. As disclosed in the directors’ report, the Group has one operating segment. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: 2.1 Interest income on financial assets a. Interest income Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. b. Loan establishment fees Loan establishment fees are deferred and recognised as an adjustment to the effective interest rate as these fees are an integral part of generating an involvement with the resulting financial instrument. 2.2 Revenue from contracts with customers Management fees Management fees are earned through the contracts with funders (customers) which entitle the consolidated entity to fees as a result of satisfying the performance obligation, being the monthly management of the associated loan portfolio. Revenue is recognised on an over-time basis. The allocation of the transaction price is calculated as a percentage of the loan balance managed by the consolidated entity on a monthly basis, being the satisfaction of the performance obligation. 61 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 Note 2. Revenue (cont.) Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be entitled in exchange for transferring services to a customer. The consolidated entity invoice on a monthly basis which aligns to the recognition criteria noted above and as a result, there is no recognition of contract assets or liabilities required. NOTE 3. OTHER INCOME Gain on loan purchase Other income CONSOLIDATED 2023 $ - - 2022 $ 31 31 Government grants revenue is recognised at fair value when there is reasonable assurance that the grant will be received and the grant conditions will be met. NOTE 4. EXPENSES Profit/(loss) before income tax from continuing operations includes the following specific expenses: Depreciation Leasehold improvements Plant and equipment Right-of-use assets Total depreciation Amortisation Technology assets Total amortisation CONSOLIDATED 2023 $ 2022 $ 116,283 134,305 553,839 804,427 101,567 53,922 604,660 760,149 121,848 121,848 171,312 171,312 Total depreciation and amortisation 926,275 931,461 Finance expense Interest and finance charges paid/payable on borrowings Interest and finance charges paid/payable on lease liabilities Finance costs expensed Cash flow hedge ineffectiveness Cash flow hedge ineffectiveness Superannuation expense Superannuation expense 62 46,110,518 18,669,112 41,691 84,702 46,152,209 18,753,814 (1,235,089) (292,247) 1,519,132 1,348,494 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 Note 4. Expenses (cont.) Share-based payments expense Share-based payments expense NOTE 5. CASH AND CASH EQUIVALENTS Cash at bank Restricted cash Total CONSOLIDATED 2023 $ 2022 $ 1,634,672 1,118,686 CONSOLIDATED 2023 $ 2022 $ 21,704,134 23,339,472 31,872,709 48,149,598 53,576,843 71,489,070 Reconciliation to cash and cash equivalents at the end of the financial year The above figures are reconciled to cash and cash equivalents at the end of the financial year as shown in the statement of cash flows as follows: Balance as above Balance as per statement of cash flows 53,576,843 71,489,070 53,576,843 71,489,070 Cash and cash equivalents include cash on hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, bank overdrafts, and restricted cash. Restricted cash is held by the Wisr Warehouse Trusts and is utilised for loan funding and not available to pay creditors of other entities within the Group. NOTE 6. LOAN RECEIVABLES A financial asset shall be measured at amortised cost if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows which arise on specified dates and that are solely principal and interest. A debt investment shall be measured at fair value through other comprehensive income if it is held within a business model whose objective is to both hold assets in order to collect contractual cash flows which arise on specified dates that are solely principal and interest as well as selling the asset on the basis of its fair value. All other financial assets are classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading or contingent consideration recognised in a business combination) in other comprehensive income (‘OCI’). Despite these requirements, a financial asset may be irrevocably designated as measured at fair value through profit or loss to reduce the effect of, or eliminate, an accounting mismatch. 63 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 Note 6. Loan receivables (cont.) 6.1 Impairment of financial assets The Group recognises a loss allowance for ECL on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the Group’s assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. The Group has adopted a three-stage model for ECL provisioning: Stage 1: 12 months ECL Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month ECL allowance is estimated. This represents a portion of the loan receivable lifetime ECL that is attributable to a default event that is possible within the next 12 months. Effective interest is calculated on the gross carrying amount of the loan receivable. Stage 2: Lifetime ECL – not credit impaired Where a loan receivable credit risk has increased significantly since initial recognition, but is not credit impaired, the loss allowance is based on the loan receivable lifetime ECL. For these loan receivables, the Group recognises as a collective provision a lifetime ECL (i.e. reflecting the remaining term of the loans receivable). Effective interest is calculated on the gross carrying amount of the financial instrument. Stage 3: Lifetime ECL – credit impaired Where there is objective evidence that the loan receivable has become credit impaired, the loss allowance is based on the loan receivable lifetime ECL. Effective interest is calculated on the net carrying amount of the financial instrument. For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss. 6.2 Allowance for expected credit losses Wisr adopted AASB 9 methodology from 30 June 2019 Financial Statements. For June FY23 reporting period, 13 months of loans booked with a least 12-month performance outcome window has been used within the ECL model to track how loans transition over a 12-month period to determine an observed PD and LGD actuals by segment to calculate provisioning factors and use these to work out the ECL Profit and Loss charge. The ECL analysis was performed on six distinct loan receivable books: (cid:0) Book 1 – Wisr Warehouse Trust No. 1 - 97% Stage 1 (cid:0) Book 2 – Wisr Freedom Trust 2021-1 - 95% Stage 1 (cid:0) Book 3 – Wisr Warehouse Trust No. 2 - 97% Stage 1 (cid:0) Book 4 – Wisr Freedom Trust 2022-1 - 97% Stage 1 64 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 Note 6. Loan receivables | 6.2 Allowance for expected credit losses (cont.) (cid:0) Book 5 – Wisr Independence Trust 2023-1 – 98% Stage 1 (cid:0) Book 6 – Wisr Finance - 43% Stage 1. This book consists of seasoned, mostly legacy loan receivables which didn’t qualify for sale to funding partners. Credit loss refers to the instance whereby a counterparty defaults on its contractual obligations resulting in financial loss to the group. Default is defined as loan receivables which are at least 90 days past due. A significant increase in credit risk is defined as loan receivables which are at least 30 days past due. The Group calculates ECL using three main components, the exposure at default (EAD), the probability of default (PD) and the loss given default (LGD). The EAD represents the total value the Group is exposed to when the loan receivable defaults. The 12-month ECL is calculated by multiplying the 12-month EAD, PD and LGD. Lifetime ECL is calculated using the lifetime PD instead. The 12-month and lifetime PDs represent the probability of default occurring over the next 12 months and the remaining maturity of the loan receivable respectively. The LGD represents the unrecovered portion of the EAD taking into account any applicable recovery of the loan receivable. The Group originates loan receivables of 3, 5, and 7 year maturities to Australian consumers. These loans are retained to maturity within the Wisr Warehouse Trust No. 1, Wisr Warehouse Trust No. 2, Wisr Freedom Trust 2021-1, Wisr Freedom Trust 2022-1 and Wisr Independence Trust 2023-1. The allowance for ECL assessment requires a degree of estimation and judgement. It is based on 12-month and lifetime ECL, grouped based on risk score determined at date of origination and days overdue, and makes assumptions to allocate an overall ECL for each group. These assumptions include the Group loan book performance history, existing economic and market conditions. Scenario analysis and forward-looking macroeconomic assessments were not incorporated as an additional overlay as a result of the following factors: (cid:0) At the completion of FY23, backtesting was completed on the ECL model to test the accuracy and robustness of the model inputs given that the portfolios, for the first time, had sufficient performance history in order to do so. The backtesting shows us that the model is heavily over provisioned for Stage 1 balances, on average by 59.9% higher (after recoveries). We can also see that the model, pre-recoveries, is also overprovisioned by 21.9% on average; (cid:0) For life provisions (stage 2 and 3), the PD’s are already adjusted based on an assumption that any balances not current after 12 months will go to loss over the life, and we know that this is a conservative prediction. The backtesting shows that for both stage 2 & 3, the model was accurate in predicting the amount of provision needed to cover the expected losses over the life, even considering the conservative approach taken; (cid:0) Given the backtesting results show that the model has various degrees of conservatism built into the assumptions, an additional economic overlay has not been included; (cid:0) Rather than adjusting the model inputs to release provisions for FY23, we have maintained the same inputs, so that the provision levels are conservative to account for any macroeconomic risk throughout FY24; 65 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 Note 6. Loan receivables | 6.2 Allowance for expected credit losses (cont.) (cid:0) Further to the backtesting, as at 30 June 2023, 36% of the total portfolio is Secured Vehicle Loans (“SVL”). The observed performance data shows that these secured assets perform with a lower probability of default, which is not yet reflected in the model inputs, which were built on predominantly Personal Loans (“PL”) performance data; (cid:0) Investment in arrears management processes (e.g. Collections), systems, and people, is a key priority for FY24 and is expected to improve arrears and ECL performance overtime. Gross loan receivables Less provision for expected credit loss CONSOLIDATED 2023 $ 2022 $ 935,956,643 783,778,935 (26,739,450) (18,940,208) 909,217,193 764,838,727 The following tables summarise gross carrying amount of loan receivables and provision for expected credit loss by stages: Gross loan receivables 12-month (Stage 1) Lifetime (Stage 2 & 3) Total gross carrying amount Less provision for expected credit loss 12 month expected credit loss Lifetime expected credit loss Total provision for expected credit loss CONSOLIDATED 2023 $ 2022 $ 907,210,471 765,300,635 28,746,172 18,478,300 935,956,643 783,778,935 11,883,613 9,303,174 14,855,837 9,637,034 26,739,450 18,940,208 Net balance sheet carrying value 909,217,193 764,838,727 Expected credit loss per gross loan receivables 12-month (Stage 1) Lifetime (Stage 2 & 3) Total expected credit loss per total gross loan receivables % 1.31 51.68 2.86 % 1.22 52.15 2.42 Reconciliation of total provision for expected credit loss Balance at 1 July $ $ 18,940,208 9,440,024 Expected credit loss expense recognised during the year to profit or loss 22,323,943 16,352,472 Receivables written-off during the year Recoveries during the year Balance at 30 June (17,589,149) (8,017,523) 3,064,448 1,165,235 26,739,450 18,940,208 66 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 NOTE 7. TRADE AND OTHER RECEIVABLES Expected to be settled within 12 months Accrued management fee income Trade receivables Total CONSOLIDATED 2023 $ 2022 $ 1,121,762 909,859 1,065,176 - 2,031,621 1,065,176 Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days. The consolidated entity has applied the simplified approach to measuring expected credit losses for trade and other receivables, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables are recognised at amortised cost, less any allowance for expected credit losses. NOTE 8. OTHER ASSETS Expected to be settled within 12 months Prepayments Deposits Cash held in trust Not expected to be settled within 12 months Term deposit Total NOTE 9. INTANGIBLE ASSETS Technology assets: Cost Accumulated amortisation Net carrying amount Technology assets under development: Cost Accumulated amortisation Net carrying amount Total intangible assets CONSOLIDATED 2023 $ 997,912 60,821 - 2022 $ 887,419 79,219 33,982 561,629 561,629 1,620,362 1,562,249 CONSOLIDATED 2023 $ 2022 $ 609,239 609,239 (530,584) (408,736) 78,655 200,503 6,930,564 2,536,232 - - 6,930,564 2,536,232 7,009,219 2,736,735 67 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 Note 9. Intangible assets (cont.) Reconciliation of technology assets under development: Balance at 1 July Additions Disposals Amortisation expense Balance at 30 June CONSOLIDATED 2023 $ 2022 $ 2,536,232 12,728 4,394,332 2,523,504 - - - - 6,930,564 2,536,232 Technology assets are recognised at cost of acquisition. They have a finite life and are carried at cost less any accumulated amortisation and any impairment losses. Technology assets are amortised over their useful lives ranging from 2 to 5 years on a straight-line basis. Development costs are charged to the statement of profit of loss and other comprehensive income as incurred, or deferred where it is probable that sufficient future benefits will be derived so as to recover those deferred costs. The carrying value of the Group’s technology assets not under development is immaterial and therefore no impairment assessment was required (2022: no impairment). During the reporting period, an additional amount of $4,394,332 was capitalised (via a combination of cash and non-cash items related to the development of products and internal systems) given the expectation of future benefit to be derived. The capitalised cost relate to financial wellness technology products and the development of internal systems. NOTE 10. TRADE AND OTHER PAYABLES Expected to be settled within 12 months Trade payables Sundry payables Accrued expenses Superannuation payable Total CONSOLIDATED 2023 $ 2022 $ 298,167 2,428,912 407,664 451,666 253,355 2,075,948 360,902 479,167 1,320,088 5,435,693 These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities. The fair value of the trade and other payables is considered to approximate their carrying value. 68 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 NOTE 11. EMPLOYEE BENEFITS Expected to be settled within 12 months Provision for annual leave Not expected to be settled within 12 months Provision for long service leave Total employee benefits CONSOLIDATED 2023 $ 2022 $ 982,317 1,141,538 267,019 166,016 1,249,336 1,307,554 Provision is made for the Group’s obligation for employee benefits arising from services rendered by employees to the end of the reporting period. Short term employee benefits are benefits (other than termination benefits and equity compensation benefits) that are expected to be settled wholly within 12 months after the end of the annual reporting period in which the employees render the related service, including wages, salaries and personal leave. Short term employee benefits are measured at the (undiscounted) amounts expected to be paid when the obligation is settled, plus any related costs. Long-term employee benefits are subjected to discounting and actuarial valuations. NOTE 12. LEASES The Group has a property lease which commenced in December 2020 with a 3 year and 1 month term. With the lease term approaching its end, management are assessing options but a final decision is yet to be made. AASB 16 related amounts recognised in the statement of financial position: Right of use assets Leased property Accumulated depreciation Net right of use asset Lease liabilities Lease liabilities – expected to be settled within 12 months Lease liabilities – not expected to be settled within 12 months AASB 16 related amounts recognised in the statement of profit or loss Depreciation charge related to right of use assets Interest expense on lease liabilities Government levies Short-term lease expense prior to entering into above lease arrangement 2023 $ 2022 $ 2,133,146 2,133,146 (1,787,231) (1,095,400) 345,915 1,037,746 441,204 - 770,716 432,336 441,204 1,203,052 2023 $ 2022 $ 553,839 604,660 41,691 65,624 - 84,702 69,473 - 661,154 758,835 12.1 Right-of-use assets A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of 69 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 Note 12. Leases (cont.) inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset. Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities. The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred. 12.2 Lease liabilities A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated entity’s incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred. Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down. 12.3 Critical accounting judgements, estimates and assumptions a. Lease term The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement is exercised in determining whether there is reasonable certainty that an option to extend the lease or purchase the underlying asset will be exercised, or an option to terminate the lease will not be exercised, when ascertaining the periods to be included in the lease term. In determining the lease term, all facts and circumstances that create an economical incentive to exercise an extension option, or not to exercise a termination option, are considered at the lease commencement date. Factors considered may include the importance of the asset to the Group's operations; comparison of terms and conditions to prevailing market rates; incurrence of significant penalties; existence of significant leasehold improvements; and the costs and disruption to replace the asset. The Group reassesses whether it is reasonably certain to exercise an extension option, or not exercise a termination option, if there is a significant event or significant change in circumstances. 70 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 Note 12. Leases (cont.) b. Lease make good provision A provision has been made for the present value of anticipated costs for future restoration of leased premises. The provision includes future cost estimates associated with closure of the premises. The calculation of this provision requires assumptions such as application of closure dates and cost estimates. The provision recognised for each site is periodically reviewed and updated based on the facts and circumstances available at the time. Changes to the estimated future costs for sites are recognised in the statement of financial position by adjusting the asset and the provision. Reductions in the provision that exceed the carrying amount of the asset will be recognised in profit or loss. c. Incremental borrowing rate An incremental borrowing rate of 6% (2022: 6%) is used as an estimate of the market borrowing rate. NOTE 13. BORROWINGS Debt facility Wisr Warehouse funding Less transaction costs Total borrowings 13.1 Debt facility CONSOLIDATED 2023 $ 2022 $ 25,000,000 6,500,000 910,872,893 779,868,954 (4,817,232) (4,086,600) 931,055,661 782,282,354 As at 30 June 2023, the Group has drawn $25m of its $25m debt facility (head company) which has a high single digit margin over BBSW, and maturity in July 2025. Part of the proceeds of this facility was used to repay the $6.5m head company debt facility that was previously in place. 13.2 Wisr Warehouse funding Wisr Warehouse funding are the facilities of Wisr Warehouse Trust No. 1, Wisr Freedom Trust 2021-1, Wisr Warehouse Trust No. 2, Wisr Freedom Trust 2022-1 and Wisr Independence Trust 2023-1. These facilities fund loan receivables for 3, 5 and 7 year maturities. At 30 June 2023, Wisr Warehouse Trust No. 1 is a Personal Loan warehouse of $450m of which $375.2m has been utilised (30 June 2022: $143.2m). The facility has a cost of funds of circa 3.0% (on a drawn basis) over BBSW, maturity in October 2023 and is secured against the receivables it funds. Wisr Freedom Trust 2021-1 Trust securitisation had a balance of $68.1m (amortising loan book) as at 30 June 2023 (30 June 2022: $122.3m) and day one weighted average margin of circa 1.5% over BBSW. Wisr Warehouse No. 2 is a Secured Vehicle Warehouse of $250m of which $174.8m has been 71 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 Note 13. Borrowings (cont.) utilised as at 30 June 2023 (30 June 2022: $275.4m). The facility has a cost of funds of circa 3.0% (on a drawn basis) over BBSW, maturity in October 2023 and is secured against the receivables it funds. Wisr Freedom Trust 2022-1 Trust securitisation had a balance of $147.7m (amortising loan book) as at 30 June 2023 (30 June 2022: $229m) and day one weighted average margin of circa 2.25% over BBSW. Wisr Independence Trust 2023-1 Trust securitisation had a balance of $164.9m (amortising loan book) as at 30 June 2023 and weighted average margin of circa 2.60% over BBSW. The debt facility and Wisr Warehouse borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. It is subsequently measured at amortised cost using the effective interest method. NOTE 14. DERIVATIVE FINANCIAL INSTRUMENTS Derivative financial instruments CONSOLIDATED 2023 $ 2022 $ 27,780,456 24,856,717 The Group enters into derivative financial instruments (interest rate swaps) to manage its exposure to interest rate risk. Derivatives are recognised initially at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial liability. Derivatives are not offset in the financial statements unless the Group has both legal right and intention to offset. Other derivatives are presented as current assets or current liabilities. Interest swap contracts are categorised as Level 2 financial instruments as they are valued using observable forward interest rates. NOTE 15. ISSUED CAPITAL 15.1 Issued and paid up capital Ordinary shares fully paid Costs of raising capital 72 CONSOLIDATED 2023 $ 2022 $ 150,251,165 150,025,772 (5,548,447) (5,548,447) 144,702,718 144,477,325 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 Note 15. Issued capital (cont.) Ordinary shares participate in dividends and the proceeds on winding up the Company. At shareholder meetings, each ordinary share is entitled to one vote when a poll is called. Otherwise, each shareholder has one vote on show of hands. Ordinary shares are classified as equity and recognised at the fair value of the consideration received by the Group. No subsequent fair valuation is performed. Incremental costs directly attributable to the issue of new shares or options are deducted from the value of issued capital. 15.2 Reconciliation of issued and paid-up capital Opening balance as at 1 July 1,356,204,729 144,477,325 1,316,431,944 143,678,390 2023 Number of shares 2022 $ Number of shares $ Issue of shares from raising capital Costs of raising capital Issue of shares to CEO on vesting of performance rights Issue of shares to CFO on vesting of performance rights Issue of shares to directors on vesting of performance rights Issue of shares to staff on vesting of long- term incentives - - - - - - - (64,062) 3,500,000 137,403 10,010,000 206,672 1,630,000 63,990 7,633,334 162,113 - - - - 6,080,000 125,531 15,339,600 324,681 44,000 Issue of shares for service 590,030 24,000 709,851 Closing Balance as at 30 June 1,361,924,759 144,702,718 1,356,204,729 144,477,325 15.3 Performance rights As at 30 June 2023, there were a total of 40,016,097 (2022: 36,947,741) performance rights outstanding. Refer to Note 30. Under the Company’s Performance Rights Plan, these performance rights were issued at no cost to the recipients and represent a right to one ordinary share in the Company in the future for no consideration, subject to satisfying the performance conditions and compliance with the rules of the Plan. 15.4 Capital management Management controls the capital of the Group in order to maintain a sustainable debt to equity ratio, generate long term shareholder value and ensure that the Group can fund its operations and continue as a going concern. The Group’s debt and capital includes ordinary share capital and financial liabilities, supported by financial assets. The Group has a debt facility in place (refer to Note 13.1) which includes covenants specific to capital and leverage thresholds, none of which are in breach. The Group’s objectives when managing capital are to maximize shareholder value and to maintain an optimal capital structure. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders. Management gives particular regard to conservation of liquidity in its recommendations as to the declaration of dividends. There were no dividends declared in in the year. 73 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 NOTE 16. EQUITY – RESERVES AND ACCUMULATED LOSSES 16.1 Employee equity benefits reserve The employee equity benefits reserve records items recognised as expenses on valuation of employee performance rights and accrual of employee short-term and long-term incentives. 16.2 Other share based payments reserve The other share based payments reserve records funding expenses accrued and are expected to be paid in the form of shares. 16.3 Cash flow hedge reserve The reserve is used to recognise the effective portion of the gain or loss of cash flow hedge instruments that is determined to be an effective hedge. Employee equity benefits reserve $ Other share based payments reserve $ Cash flow hedge reserve $ Total $ Movement in reserves: At 1 July 2021 Share based payments expense Transfer from reserve to retained earnings Transfer from reserve on exercise of options Issue of shares for services rendered Gain arising on changes in fair value of hedging instruments entered into for cash flow hedges Cumulative gain arising on changes in fair value of hedging instruments reclassified to profit or loss At 30 June 2022 At 1 July 2022 Share based payments expense Transfer from reserve to retained earnings Transfer from reserve on exercise of options Issue of shares for services rendered Gain arising on changes in fair value of hedging instruments entered into for cash flow hedges Cumulative loss arising on changes in fair value of hedging instruments reclassified to profit or loss 2,282,189 1,246,858 (39,058) (818,997) - - - 2,670,992 2,670,992 1,634,080 (424,589) (201,393) - - - 375,159 11,025 - - (44,000) 593,106 3,250,454 - - - - 1,257,883 (39,058) (818,997) (44,000) - 20,920,095 20,920,095 - 3,380,325 3,380,325 342,184 24,893,526 27,906,702 342,184 24,893,526 27,906,702 592 - - (24,000) - - - - 1,634,672 (424,589) (201,393) (24,000) - 13,974,585 13,974,585 - (12,285,934) (12,285,934) At 30 June 2023 3,679,090 318,776 26,582,176 30,580,043 74 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 Note 16. Equity – reserves and accumulated losses (cont.) Accumulated losses: Opening balance Total loss after income tax for the year Transfer from reserve to retained earnings Total CONSOLIDATED 2023 $ 2022 $ (94,538,394) (74,672,545) (13,154,060) (19,904,907) 424,589 39,058 (107,267,865) (94,538,394) NOTE 17. CAPITAL AND LEASE COMMITMENTS 17.1 Finance lease commitments There are no finance lease commitments (2022: nil). 17.2 Operating lease commitments There are no non-cancellable operating leases contracted for but not recognised in the financial statements (2022: nil). Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognised as expenses in the periods in which they are incurred on a straight line basis. In December 2020 the Group entered into a property lease with a 3 year and 1 month term. With the lease term approaching its end, management are assessing options but a final decision is yet to be made. Due to the adoption of AASB 16, in the prior period, the Group had no outstanding operating lease commitments due at 30 June 2023. NOTE 18. INCOME TAX Numerical reconciliation of income tax expense to prima facie tax payable Loss from continuing operations before income tax expense Tax benefit at the tax rate of 30% (2022: 30%) Tax effect of amounts which are not deductible (taxable) in calculating taxable income: (cid:0) (cid:0) Temporary differences not recognised Non-recognition of current year tax losses Income tax expense CONSOLIDATED 2023 $ 2022 $ (13,154,060) (19,904,907) (3,946,218) (5,971,472) 2,159,282 2,063,097 1,786,936 3,908,375 - - As at 30 June 2023, the entity has unrecognised carried forward tax losses of $67,671,348 (2022: $61,714,896), the utilisation of which is dependent on the entity satisfying the requirements of the Same Business Test (SBT). The income tax expense or benefit for the period is the tax payable / refundable on the current period's taxable income based on the national income tax rate for each jurisdiction adjusted by 75 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 Note 18. Income tax (cont.) changes in deferred tax assets and liabilities, attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. Wisr Limited and its wholly owned controlled entities have implemented the tax consolidation legislation as of 1 January 2004. The head entity, Wisr Limited, and the controlled entities in the tax consolidated group continue to account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a standalone taxpayer in its own right. In addition to its own current and deferred tax amounts, Wisr Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable from or payable to other entities in the group. Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) wholly owned tax consolidated entities. 76 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 NOTE 19. REMUNERATION OF AUDITORS During the year, the following fees were paid or payable for services provided by the auditor: BDO Audit Pty Ltd (cid:0) (cid:0) (cid:0) (cid:0) Audit of the financial report – assurance services Taxation services – non-assurance services Review of the half-yearly financial report – assurance services Accounting advice – non-assurance services CONSOLIDATED 2023 $ 2022 $ 135,000 121,500 5,400 45,791 - 34,102 43,000 2,000 186,191 200,602 NOTE 20. CONTINGENT ASSETS AND LIABILITIES There were no material contingent assets and liabilities reportable during the period (2022: nil). NOTE 21. SUBSIDIARIES The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policies described in Note 1: Country of incorporation % owned 2023 % owned 2022 Name Status Wisr Finance Pty Ltd Registered 2 May 2006 Wisr Investment Management Pty Ltd Registered 20 February 2015 Wisr Loans Servicing Pty Ltd Registered 20 February 2015 Wisr Credit Management Pty Ltd Registered 19 March 2015 Wisr Marketplace Limited Registered 16 March 2015 Wisr Services Pty Ltd Wisr Funding Pty Ltd Wisr Notes 1 Pty Ltd Registered 13 January 2017 Registered 9 April 2018 Registered 31 July 2018 Wisr Warehouse Trust No. 1 Registered 28 October 2019 Wisr Freedom Trust 2021-1 Registered 29 March 2021 Wisr Warehouse Trust No. 2 Registered 25 August 2021 Wisr Freedom Trust 2022-1 Registered 8 April 2022 Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Wisr Independence Trust 2023-1 Registered 15 September 2022 Australia 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% - NOTE 22. EVENTS AFTER THE REPORTING PERIOD On 16 August 2023, Wisr announced that Wisr’s Chief Financial Officer, Andrew Goodwin, had been appointed to the role of Chief Executive Officer, effective immediately, and Joanne Edwards was promoted to Chief Operating Officer. This followed the termination of the employment of Chief Executive Officer, Anthony Nantes, by the Wisr Board. On 21 August 2023, Matthew Brown was appointed interim Chair following John Nantes' leave of absence per the ASX release on 21 August 2023. 77 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 NOTE 23. KEY MANAGEMENT PERSONNEL DISCLOSURES 23.1 Compensation The aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out below: Short-term employee benefits Post-employment benefits Long-term benefits Share-based payments Total KMP compensation CONSOLIDATED 2023 $ 2022 $ 1,907,973 1,257,342 95,245 39,815 27,896 60,898 24,553 150,967 2,070,929 1,493,760 23.2 Short-term employee benefits These amounts include fees and benefits paid to the Chair and non-executive directors as well as all salary, paid leave benefits, fringe benefits and cash bonuses awarded to directors and other KMP. 23.3 Post-employment benefits These amounts are the current year’s estimated cost of providing for the Group’s superannuation contributions made during the year. 23.4 Long-term benefits These amounts represent long service leave benefits accruing during the year. 23.5 Share-based payments These amounts represent the expense related to the participation of KMP in equity-settled benefit schemes as measured by the fair value of the options, rights and shares granted on grant date. NOTE 24. RELATED PARTY TRANSACTIONS 24.1 Parent entity The legal parent is Wisr Limited, as seen in Note 25. 24.2 Subsidiaries Interest in subsidiaries are set out in Note 21. 78 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 Note 24. Related party transactions (cont.) 24.3 Transactions with related parties As at 30 June 2023, all transactions that have occurred among the subsidiaries within the Group have been eliminated for consolidation purposes. During the period, $220,000 was paid to Mr A Goodwin15 as a drawdown of an Executive loan agreement (2022: nil related party transactions). Please see section 8 of the Remuneration Report for further information. NOTE 25. PARENT ENTITY INFORMATION 25.1 Summary financial information The individual financial statements for the parent entity show the following aggregate amounts: Statement of financial position Total assets Total liabilities Shareholders’ equity Issued capital Reserves Accumulated losses Loss for the year Total comprehensive loss 2023 $ 2022 $ 149,651,586 133,484,456 25,251,628 6,744,732 137,690,491 137,465,097 3,997,865 3,013,176 (17,288,398) (13,738,549) 124,399,958 126,739,724 (3,549,849) (3,290,318) (3,549,849) (3,290,318) The financial information for the parent entity, Wisr Limited, has been prepared on the same basis as the consolidated financial statements, except that investments in subsidiaries are accounted for at cost net of impairment in the parent financial statements. 25.2 Contingent liabilities See Note 20. 25.3 Contractual commitments The parent entity had no capital commitments for property, plant and equipment as at 30 June 2023 and 30 June 2022. 15 Effective 16 August 2023, Mr A Goodwin has been appointed Chief Executive Officer. This followed the termination of employment of Mr A Nantes as Chief Executive Officer. 79 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 NOTE 26. CASH FLOW INFORMATION Reconciliation of loss after income tax to net cash outflows from operating activities Loss for the year Adjustments for non-cash items or items for which the cash flows are investing or financing cash flows Depreciation and amortisation Share-based payments and accruals Fundraising expenses Expected credit losses expense / loan asset impairments and write-offs Loss on investments Changes in operating assets and liabilities: (Increase) in loan receivables (Increase) / decrease in trade and other receivables (Increase) in other assets (Decrease) / Increase in trade and other payables (Decrease) / Increase in provision for employee benefits Increase in accrued finance costs Net cash flows used in operating activities NOTE 27. EARNINGS PER SHARE Basic earnings per share Diluted earnings per share CONSOLIDATED 2023 $ 2022 $ (13,154,059) (19,904,907) 926,275 931,461 1,634,672 1,118,686 (1,110,703) 518,764 22,323,943 16,352,472 - 1,168,695 (2,556,450) (4,583,274) (966,445) 143,458 (58,113) (478,861) (3,799,331) 1,255,346 (58,218) 3,069,600 435,339 464,743 6,251,171 (2,578,078) 2023 Cents (0.97) (0.97) 2022 Cents (1.48) (1.48) Number of shares Number of shares Weighted average number of shares used as the denominator Weighted average number of shares used as the denominator in calculating basic earnings per share 1,356,580,841 1,347,814,306 Adjustments for calculation of diluted earnings per share Weighted average number of ordinary shares used in calculating dilutive earnings per share - - 1,356,580,841 1,347,814,306 The performance rights on issue have not been considered in the diluted earnings per share as their effect is anti-dilutive. 27.1 Basic earnings per share Basic earnings per share is calculated by dividing the result attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the financial year. 80 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 Note 27. Earnings per share (cont.) 27.2 Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. NOTE 28. SEGMENT INFORMATION Management has determined that the Group has one operating segment, being the provision of personal loans to consumers. The internal reporting framework is based on the principal activity as discussed above and is the most relevant to assist the Board as Chief Operating Decision Maker with making decisions regarding the Group and its ongoing growth. The assets as presented relate to the operating segment. The Group operates in Australia only as at 30 June 2023. NOTE 29. DIVIDENDS 29.1 Dividends paid during the year Ordinary shares There were no dividends paid during the year (2022: nil). 29.2 Franking Credits Franking credits available for subsequent reporting periods based on a tax rate of 30% (2022 – 30%) 2023 $ 2022 $ 1,542,955 1,542,955 The above amounts are calculated from the balance of the franking account as at the end of the reporting period, adjusted for franking credits and debits that will arise from the settlement of liabilities or receivables for income tax and dividends after the end of the year. NOTE 30. SHARE BASED PAYMENTS The share-based payment expense of $1,634,672 has been incurred in the year (2022: $1,257,883 of which $1,118,686 was recognised in the consolidated profit and loss statement and the remaining $139,197 was capitalised as part of intangible assets). The breakdown of the share based payments for the year are as follows: (cid:0) Board/KMP LTIs of $127,896 (2022: $150,967) accrued up to 30 June 2023; 81 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 Note 30. Share based payments (cont.) (cid:0) Staff LTIs of $1,606,184 accrued up to 30 June 2023 and relate to FY18 – FY23 (2022: $956,694 expensed and $139,197 capitalised as part of intangible assets); (cid:0) Recruitment expense of $592 (2022: $12,575). The fair value of the Board/KMP performance rights and staff LTI scheme has been calculated in accordance with AASB 2 Share-based Payment. FY23 Staff LTI scheme: Assumptions - Grant date 1 July 2022, no volatility, 10% attrition rate, spot price $0.081. Tranche 1 2 Rights granted Vesting determination date 12,220,668 12,220,693 30 Sep 2023 30 Sep 2024 Performance rights Balance at beginning of year (cid:0) (cid:0) (cid:0) Granted Forfeited Exercised Balance at end of year Number of performance rights 36,947,741 24,441,361 (16,243,005) (5,130,000) 40,016,097 2023 Exercise price Nil Nil Nil Nil Nil Number of performance rights 70,307,676 16,199,665 (13,830,000) (35,729,600) 36,947,741 2022 Exercise price Nil Nil Nil Nil Nil The Group provides benefits to employees in the form of share-based payment transactions, whereby employees render services in exchange for shares or performance rights (equity-settled transactions). The cost of the transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined by using a binomial model. In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of the Company (market conditions). The cost of equity-settled transactions is recognised as an expense, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to exercise the rights (vesting date). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of rights that, in the opinion of the Directors of the Company, will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. Where the terms of an equity-settled option are modified, at a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of the modification. 82 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 NOTE 31. FINANCIAL RISK MANAGEMENT The business of the Group and the industry in which it operates are subject to risk factors both of a general nature and risks which are specific to the industry and/or the Group’s business activities. The potential effect of these risk factors either individually, or in combination, may have an adverse effect on the future financial and operating performance of the Group, its financial position, its prospects and the value of its shares. The following are the key risks that specifically relate to the Group: 31.1 Credit risk As a lending business, the Group is at risk of a larger than expected number of its borrowers failing or becoming unable to repay their loans, particularly for loans which are held on balance sheet as opposed to being funded by a third party. While loans are assessed according to a strict Credit Manual and Credit Risk Policy as well as being targeted at prime retail borrowers (not ‘payday’ lending customers), the loans may be unsecured and so are subject to the capacity of the individual borrower to repay the loan. 31.2 Inability to recover defaulted loans Default is defined by the group as the failure of the borrower to meet required contractual cashflows, this definition is selected as it aligns with the operational analysis of the loan books. If a borrower does not meet their required loan payments and the loan goes into default, the Group may not be able to recover the relevant portion of the value of the loan or the cost of recovery of the loan may be deemed to be greater than the amount potentially recoverable, even if the borrower owns assets such as a house. In this case the loan may be sold (at a loss) to a third party or written off as a bad debt. High levels of bad debts could limit profitability and adversely affect future performance. The Group mitigates this risk by approving loans according to a strict credit criteria. The risk is also mitigated through the use of third party funders for a proportion of loans. 31.3 Fraudulent borrowers There is a general ongoing risk that borrowers may deliberately fabricate evidence to support loan applications and they have no intention of paying off their loan. The Group has procedures in place to detect fraudulent applications and activities, however the risk of fraud cannot be totally removed. 31.4 Personal Loans may be unsecured The Group’s loans may be issued on an unsecured basis. The Group’s reputation and financial position could be adversely impacted if the Group’s targeted credit performance of its loan book is not met and collections and debt recovery procedures prove less than effective. 83 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 Note 31. Financial risk management (cont.) 31.5 Costs of acquiring loans The Group’s business model and on-going commercial viability is directly linked to its ability to attract suitable borrowers and increase the volume of loans funded and managed by the Group. The Group has built its existing loan volumes using a mix of direct channel marketing (using search engine marketing and media advertising) and developing relationships with mortgage and finance brokers to introduce loans. The Group has forecasted the future costs of acquiring loans in the desired volumes however these costs are subject to market forces and cannot be predicted with certainty. 31.6 Ability to source third party funding and sell loans The Group’s business model and on-going commercial viability is strongly linked to its ability to source sufficient third-party funding to enable it to sell its loans and raise the funds to lend to potential borrowers. The Group seeks to manage this risk by establishing multiple sources of institutional loan buyers. 31.7 Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash to ensure the ability to meet financial obligations as they fall due. The Group manages liquidity risk by maintaining a cash reserve and continuously monitoring forecast and actual cash flows. MATURITY ANALYSIS – GROUP 2023 Financial assets Non-derivatives Cash and cash equivalents Loan receivables Trade and other receivables Other assets Other financial assets Derivatives at fair value Within 1 year $ 1-5 years $ Total $ 53,576,843 173,932,602 2,031,621 60,821 - - 735,284,591 - 561,629 220,000 53,576,843 909,217,193 2,031,621 622,450 220,000 Interest rate swaps – cash flow hedges 17,045,211 12,713,529 29,758,740 Total financial assets Financial liabilities Non-derivatives Trade creditors Other payables Borrowings Total financial liabilities Net financial assets 246,647,098 748,779,749 995,426,847 298,167 1,021,921 2,604,010 3,924,098 - - 928,451,651 928,451,651 242,723,000 (179,671,902) 298,167 1,021,921 931,055,661 932,375,749 63,051,098 84 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 Note 31. Financial risk management | 31.7 Liquidity risk (cont.) Within 1 year $ 1-5 years $ Total $ 71,489,070 - 134,644,329 630,194,399 1,065,176 113,201 - 561,629 71,489,070 764,838,728 1,065,176 674,830 8,845,960 216,157,736 17,471,816 26,317,776 648,227,844 864,385,580 2,428,912 3,006,781 929,489 6,365,182 - - 781,352,865 781,352,865 209,792,554 (133,125,021) 2,428,912 3,006,781 782,282,354 787,718,047 76,667,533 2022 Financial assets Non-derivatives Cash and cash equivalents Loan receivables Trade and other receivables Other assets Derivatives at fair value Interest rate swaps – cash flow hedges Total financial assets Financial liabilities Non-derivatives Trade creditors Other payables Borrowings Total financial liabilities Net financial assets 31.8 Market risk Price risk The Group is not exposed to any significant price risk at 30 June 2023. 31.9 Interest rate risk Interest rate risk is the risk that the Group will experience deterioration in its financial position as interest rates change over time. The Group is exposed to interest rate risk due to repricing and mismatches in interest rates between assets and liabilities (i.e. borrowing at floating interest rates and lending at fixed interest rates). The risk is managed by the Group using interest rate swap contracts to convert the floating rate exposure on the Warehouse trust borrowings to fixed interest rates. Hedging activities are undertaken in line with the Group's hedging policy. Interest rate swap contracts Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating rate interest amounts calculated on agreed notional principal amounts. Such contracts enable the Group to mitigate the cash flow exposures on its variable rate borrowings. The Group designates the interest rate swap contracts as cash flow hedges. As the critical terms of the interest rate swap contracts and their corresponding hedged items are the same, the Group performs a qualitative assessment of effectiveness and it is expected that the value of the interest rate swap contracts and the value of the corresponding hedged items will systematically change in opposite direction in response to movements in the underlying interest rates. The main source of hedge ineffectiveness in these hedge relationships is the effect of the counterparty and the Group’s own credit risk on the fair value of the interest rate swap contracts, which is not reflected in the fair value of the hedged item attributable to the change in interest rates. Other sources of ineffectiveness include the re-designation of amended interest rate swap contracts, which have a non-zero fair value at inception of the hedge relationship. 85 WISR LIMITED • ANNUAL REPORT 2023 FINANCIAL REPORT | NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June 2023 Note 31. Financial risk management | 31.9 Interest rate risk (cont.) The following table details various information regarding interest rate swap contracts outstanding at the end of the reporting period and their related hedged items. Interest rate swap contract assets and liabilities are included in Note 14. Hedging instruments (cid:0) Average contracted fixed interest rate (cid:0) Notional principal (borrowings) (cid:0) Carrying amount of the hedging instrument (liability) (cid:0) Change in fair value used for calculating hedge ineffectiveness Hedged items (cid:0) Nominal amount of the hedged item (cid:0) Change in value used for calculating hedge ineffectiveness Balance in cash flow hedge reserve for continuing hedges Balance in cash flow hedge reserve arising from hedging relationships for which hedge accounting is no longer applied INTEREST RATE SWAPS 2023 2022 2.57458% 1.42734% 939,486,979 693,426,793 27,780,456 24,856,717 5,425,600 15,442,262 939,486,979 693,426,793 7,313,598 16,791,815 13,615,051 15,564,838 12,967,125 9,328,688 Hedge ineffectiveness recognised in profit or loss (within Finance costs) 1,265,702 525,784 86 WISR LIMITED • ANNUAL REPORT 2023 DIRECTORS’ DECLARATION The directors of the Company declare that, in the opinion of the directors: a. the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including: i. ii. giving a true and fair view of the financial position and performance of the consolidated entity; and complying with Australian Accounting Standards, including the interpretations, and the Corporations Regulations 2001; b. c. d. the financial statements and notes thereto also comply with International Financial Reporting Standards, as disclosed in Note 1; the directors have been given the declarations required by s.295A of the Corporations Act 2001; and there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act 2001. ............................................................... MATTHEW BROWN DIRECTOR Sydney 24 August 2023 87 WISR LIMITED • ANNUAL REPORT 2023 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF WISR LIMITED 88 WISR LIMITED • ANNUAL REPORT 2023 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF WISR LIMITED 89 WISR LIMITED • ANNUAL REPORT 2023 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF WISR LIMITED 90 WISR LIMITED • ANNUAL REPORT 2023 ASX ADDITIONAL INFORMATION Additional information required by the ASX Limited Listing Rules and not disclosed elsewhere in this report is set out below. This information is effective as at 22 September 2023. a. Distribution of shareholders The distribution of issued capital as at 22 September 2023 was as follows: Size of holding 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Total Number of shareholders Number of ordinary shares Percentage of issued capital 210 1,109 859 2,506 1,150 5,834 40,597 3,627,210 6,908,139 101,030,106 1,250,318,707 1,361,924,759 0.00 0.27 0.51 7.42 91.80 100.00 There were 2,600 shareholders with unmarketable parcels totalling 16,054,556 shares based on the share price as at close of business on 22 September 2023. b. Distribution of performance rights holders The distribution of unquoted Performance Rights on issue as at 22 September 2023 were as follows: Size of holding 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over Total Number of holders Number of unquoted rights - 1 2 8 50 61 - 1,913 19,128 377,244 31,019,433 31,417,718 c. Distribution of options The were nil unquoted Options on issue as at 22 September 2023. 91 WISR LIMITED • ANNUAL REPORT 2023 ASX ADDITIONAL INFORMATION d. Substantial shareholders The securities held by substantial shareholders, as disclosed to the Company as at 22 September 2023, are as follows: Shareholder HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2 ALCEON GROUP PTY LTD ADCOCK PRIVATE EQUITY PTY LTD ADCOCK GROUP SUPER PTY LTD MR BROOK ANTHONY ADCOCK Number of fully paid ordinary shares Percentage of issued capital (%) 129,601,924 902,885 130,504,809 74,261,697 41,717,864 4,631 115,984,192 9.52 0.07 9.59 5.45 3.06 0.00 8.51 Total 246,489,001 18.10 e. Twenty largest shareholders of quoted equity securities The twenty largest shareholders of quoted equity securities were as follows: Shareholder HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2 ADCOCK PRIVATE EQUITY PTY LTD NETWEALTH INVESTMENTS LIMITED ADCOCK GROUP SUPER PTY LTD BNP PARIBAS NOMS PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSI EDA J P MORGAN NOMINEES AUSTRALIA PTY LIMITED ANTHONY NANTES MR ANTHONY NANTES POINT CAPITAL PTY LTD ANDREW GOODWIN MACQUARIE BANK LIMITED CITICORP NOMINEES PTY LIMITED DE NANTES INVESTMENT CO PTY LTD MOSLOF SERVICES PTY LTD GENTILLY INVESTMENTS PTY LTD GENTILLY HOLDINGS PTY LTD SUPERHERO SECURITIES LIMITED MR DON LAZZARO & MRS ANN LAZZARO L J K NOMINEES PTY LIMITED Number of fully paid ordinary shares Percentage of issued capital (%) 129,601,924 74,261,697 42,852,630 41,717,864 32,952,030 32,500,000 32,306,093 31,660,000 26,477,986 23,467,952 22,626,666 18,998,019 14,532,810 13,201,370 12,775,000 12,576,732 12,501,586 12,247,993 9,000,000 8,019,242 9.52 5.45 3.15 3.06 2.42 2.39 2.37 2.32 1.94 1.72 1.66 1.39 1.07 0.97 0.94 0.92 0.92 0.90 0.66 0.59 Total 604,277,594 44.36 f. Restricted securities 68,326,666 ordinary shares are currently subject to voluntary escrow for a period of one year following cessation of the holder’s employment with the Company, or Board approval. 92 WISR LIMITED • ANNUAL REPORT 2023 ASX ADDITIONAL INFORMATION g. Unquoted equity securities The Company had the following unquoted securities on issue as at 22 September 2023: Unquoted Options The Company had nil unquoted options on issue as at 22 September 2023. Performance Rights The Company had 31,417,718 performance rights on issue, held by 61 holders and issued as part of an employee incentive scheme. h. Voting rights i. Ordinary Shares In accordance with the Constitution each member present at a meeting whether in person, or by proxy, or by power of attorney, or in a duly authorised representative in the case of a corporate member, shall have one vote on a show of hands, and one vote for each fully paid ordinary share, on a poll. ii. Performance Rights and Options Holders of Performance Rights and Options have no voting rights. i. On-market buy-backs There is no current on-market buy back in relation to the Company’s securities. 93 WISR LIMITED • ANNUAL REPORT 2023 CORPORATE DIRECTORY DIRECTORS Matthew Brown (Interim Chair) John Nantes (Non-Executive Chair) Craig Swanger Cathryn Lyall Kate Whitney COMPANY SECRETARY Vanessa Chidrawi May Ho REGISTERED OFFICE Level 4, 55 Harrington Street, The Rocks, NSW 2000, Australia Telephone: 1300 992 007 SHARE REGISTER Link Market Services Limited Level 12, 680 George Street Sydney, NSW 2000 Telephone: 1800 770 850 AUDITOR BDO Audit Pty Ltd Level 11, 1 Margaret Street Sydney, NSW 2000 STOCK EXCHANGE LISTING Shares are listed on the Australian Stock Exchange (ASX: WZR) DOMICILE Publicly listed company incorporated in Australia 94 STAY UPDATED Scan to join Wisr’s Investor Hub ABN 80 004 661 205 Level 4, 55 Harrington St, The Rocks NSW 2000 +61 1300 992 007 wisr.com.au WISR LIMITED • ANNUAL REPORT 2023

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